South Sydney District Rugby League Football Club Ltd v News Limited

(iii) What is comprehended by class 206 In his judgment the primary judge dealt with a submission of Souths that the circumstances considered by the Full Court in Pont Data were an analogue of the present case and the application of the Full Court's reasoning led to the conclusion that the class relied on by Souths was a class on whom News' and ARL's conduct impacted in a proscribed way. 207 Having regard to the conclusions I have reached about Souths' case concerning the 1997 clubs as particular persons, it is unnecessary to consider in detail the case advanced by Souths' based on the contention that the fourteen team term was an exclusionary provision operating on the pleaded particular class. However, the view I have taken about the scope of s 4D(1)(b) as it applies to particular persons is conformable with the conclusion of the Full Court in Pont Data which viewed the provision as having a wide operation in circumstances where the identity of each of the persons on whom the alleged exclusionary provision might operate was neither ascertained nor ascertainable at the time the agreement was entered.

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

Remedy 209 It follows from what I have said to this point, that Souths has established that ARL and News contravened s 45(2)(a)(i). It would also follow, from the facts as found by the primary judge, that the fourteen team term was given effect to by ARL and News in contravention of s 45(2)(b). 210 Since preparing the above reasons, I have had the benefit of reading the reasons of Merkel J in a draft form. While we have adopted a different approach to the issues raised in the appeal, we have reached the same ultimate conclusion. For the reasons given by Merkel J in [297] to [301] and [303] to [307], I would make the orders his Honour proposes. 211 In relation to Merkel J's observations in [302], I do not consider that orders should not be made because they may result in another breach of the Act. Whether, following judgment, there are further breaches of the Act by the respondents and what are their consequences is to be determined if and when there is a breach and steps taken, if at all, to enjoin those involved. Also, as Merkel J points out in the final sentence of that paragraph, the orders do not mandate conduct that would result in a breach of the Act. 212 The only additional observation I would wish to make is that the respondent clubs who took an active part in the appeal indicated they did not wish to make submissions on the question of whether injunctive relief should issue against the other respondents restraining the implementation of the fourteen team term. They adopted this position because such an order would not affect them.

I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

BETWEEN: SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED (ACN 003 107 292)

AND the Fifth to Twenty-third Respondents set out in the Schedule

REASONS FOR JUDGMENT MERKEL J: 213 The background to the appeal and the issues argued, as well as the contentions of the parties in relation to those issues, are set out in the reasons for judgment of Heerey J. The question raised by the appeal is whether a provision of an agreement, arrangement or understanding between the two premier league rugby competition organisers, News Ltd and its subsidiaries ("News") and Australian Rugby League Limited ("ARL") that their merged National Rugby League competition ("the NRL competition") was to be limited to fourteen teams is an exclusionary provision as defined by s 4D(1) of the Trade Practices Act 1974 (Cth) ("the Act"). 214 Section 45(2) of the Act prohibits a corporation from making a contract or arrangement, or arriving at an understanding that contains an exclusionary provision, and from giving effect to an exclusionary provision. Section 4D(1) of the Act, relevantly, defines an exclusionary provision: "A provision of a contract, arrangement or understanding … shall be taken to be an exclusionary provision … if: (a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and (b) the provision has the purpose of preventing, restricting or limiting: (i) the supply of … services to, or the acquisition of … services from, particular persons or classes of persons; or (ii) the supply of … services to, or the acquisition of … services from, particular persons or classes of persons in particular circumstances or on particular conditions; by all or any of the parties to the contract, arrangement or understanding … or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate." Section 4D(2) deems a person to be competitive with another person: "… if, and only if, the first-mentioned person … is likely to be, or, but for the provision of any contract, arrangement or understanding … would be, or would be likely to be, in competition with the other person, … in relation to the supply or acquisition of all or any of the … services to which the relevant provision of the contract, arrangement or understanding … relates." Section 4F(1)(a) provides: "a provision of a contract, arrangement or understanding shall be deemed to have had, or to have, a particular purpose if: (i) the provision was included in the contract, arrangement or understanding … for that purpose or for purposes that included or include that purpose; and (iii) that purpose was or is a substantial purpose." 215 The provision limiting the NRL competition to fourteen teams ("the fourteen team term"), was pleaded by the appellant ("Souths") as follows: "[i]n the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14, with no more than eight and no fewer than six teams from Sydney." Souths claims that the fourteen team term: · had the purpose of preventing, restricting or limiting the supply of competition organising services by News (through its subsidiary, National Rugby League Investments Pty Ltd ("NRLI")) and ARL to, and the acquisition of team services from, particular persons or classes of persons within the meaning of s 4D(1)(b) of the Act; · was therefore an exclusionary provision that had been included in a contract, arrangement or understanding in breach of s 45(2) of the Act. 216 Souths alleges that the respective services were to be supplied or acquired, as the case may be, by News (through NRLI) and ARL as equal partners ("the NRL partners"). Although ultimately the partners were NRLI and ARL, NRLI was a subsidiary of Super League Pty Ltd ("Super League") which was a subsidiary of News. It is convenient to refer to News in these reasons for judgment as including NRLI and Super League. No party suggested that anything turned on News using or acting through its subsidiaries in establishing the merged NRL competition with ARL. The "competition organising services" of the NRL partners were pleaded as: "the supply of the services of organising and running top level rugby league competitions to Souths, the clubs and franchisees which had participat[ed] in 1997 in the ARL Optus Cup and the Super League competition including the Clubs, and to any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition;" The "team services" were pleaded as: "the acquisition of services, being the provision of rugby league teams to play in the top level rugby league competitions organised and run by the ARL on the one hand, and News and [Super League] on the other hand, from Souths, the clubs and franchisees which had participat[ed] in 1997 in the ARL Optus Cup and the Super League competition including certain of the Clubs and any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition." As Hely J observed in South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120 at 131 ("South Sydney"), the two services are "opposite sides of the same coin". 217 The trial judge concluded that although the fourteen team term was in a contract, arrangement or understanding made between News and ARL, who were competitive with each other, the term did not have the purpose of preventing, restricting or limiting the supply of services by News and ARL to, or the acquisition by News and ARL of services from, particular persons or classes of persons. Souths, in its appeal against the decision of the trial judge, does not challenge the primary findings of fact made by his Honour. Rather, Souths claims his Honour erred in concluding, on the basis of those findings, that there was not a proscribed purpose and, in any event, no particular persons or particular class of persons were the objects of any such purpose. 218 Souths also relied upon the proposed supply by the NRL partners of the benefit or facility of funding, by way of an annual grant of $2 million, to each of the clubs providing team services in the NRL competition from 2000 onwards. Although, at trial, the funding service was relied upon by Souths as a separate service for the purposes of its s 4D claims, it did not challenge the trial judge's finding that the purpose of the funding service was to pay $2 million to the fourteen clubs to which competition organising services were supplied and from which the team services were acquired. Accordingly, Souths accepted that the provision of funding was not a service independent of, and separable from, the competition organising and team services. It follows that, as the supply of funding services is not severable from the other services, it does not require separate consideration. 219 The fourteen team term was pleaded to have the purpose of: "(a) restricting or limiting the supply of services (namely organising and running top level rugby league competitions) by the NRL Partnership to particular persons …; and (b) preventing the supply of services (namely, organising and running top level league competitions) by the NRL Partnership to particular classes of persons… …" and of: "(a) restricting or limiting the acquisition by the NRL Partnership of services (namely, the provision of rugby league teams to play in the NRL competition) from particular persons (…); and (b) preventing the acquisition by the NRL Partnerships of the services of the provision of rugby league teams to play in the NRL competition from particular classes of persons, …" 220 Although the trial judge dealt with the issues of "preventing" and "restricting or limiting" the supply or acquisition of the relevant services as separate issues, Souths did not plead them as such. Rather, the case pleaded was that the fourteen team term had the purpose of restricting or limiting the supply and acquisition of the relevant services to or from (as the case may be) particular persons and of preventing the supply and acquisition of the relevant services to or from (as the case may be) a particular class of persons. The particular persons were pleaded to be: "…the clubs which had participated in the ARL competition and the Super League competition prior to 19 December 1997 and who had not withdrawn from those competitions before that date;" and the particular classes of persons were pleaded to be: "(i) the clubs which participated in the 1997 ARL and Super League competitions and who had not withdrawn from those competitions before that date other than the 14 clubs (including merged clubs as a single club), who would be selected to participate in the competition from the year 2000; and (ii) all rugby league clubs which were willing and able to participate competitively in a top level rugby league competition other than the 14 clubs (including merged clubs as a single club) who would be selected to participate in the NRL competition from the year 2000." 221 The pleading distinguishes between the "clubs", to whom the competition organising services are to be supplied by the NRL partners, and the "teams", which are the subject of the team services to be acquired by the NRL partners. In the context of premier league sport it is understandable that the club and the team it fields are often treated as synonymous. However, in a legal context a distinction is to be drawn between a service supplier or acquirer and the service supplied. Thus, in the context of s 4D, the services said to be the subject matter of the purpose (the team and organisational services proposed to be prevented, restricted or limited) are to be distinguished from the clubs or entities alleged to be the objects of the purpose. In that context the fourteen team term is a quantitative restriction or limitation, as the relevant services are to be restricted or limited to fourteen teams fielded by the fourteen clubs or entities selected to participate in the 2000 NRL competition. 222 Before turning to the form of the fourteen team term as it appeared in the 19 December 1997 Understanding ("the December 1997 Understanding"), the 18 February 1998 Memorandum of Understanding ("the February 1998 MoU") and the 14 May 1998 Merger Agreement ("the Merger Agreement") made or arrived at between News and ARL, it is appropriate to re-iterate certain aspects of the factual setting in which the term was to operate. 223 Prior to the merged NRL competition, twelve clubs each fielded a team in the ARL Optus Cup competition: Balmain, Manly, Norths, Parramatta, St George, Souths, Sydney City, Wests, Newscastle, Illawarra, Gold Coast and South Queensland. When News' Super League competition commenced in 1997, ten newly created or former ARL clubs each fielded a team in that competition: Brisbane, Cronulla, Canberra, Penrith, Canterbury, Auckland, Perth, North Queensland, Adelaide and Hunter. The two competitions were the two premier rugby league competitions in Australia in 1997. 224 Two Super League clubs, Perth and Hunter, had ceased to exist at the end of 1997 and one ARL club, South Queensland, did not participate in the merged competition in 1998. The nineteen remaining clubs and a new club, Melbourne, each fielded a team in the merged NRL competition, which commenced on 13 March 1998. In October 1998 Gold Coast and Adelaide withdrew from the NRL competition and the St George and Illawarra clubs merged. Consequently, the 1999 NRL season commenced on 13 March 1999 with seventeen clubs (treating St George/Illawarra as one club) fielding seventeen teams. In late July 1999 the NRL approved the formation of a joint venture between Balmain and Wests for the 2000 NRL competition. 225 Under the fourteen team term there were to be only fourteen licenses available to fourteen clubs or entities to enable fourteen teams to compete in the 2000 NRL competition. 226 Norths failed for solvency reasons to meet the Basic Criteria for eligibility to compete in the 2000 NRL competition. Five five year licences had been granted under the priority system for regional or merged clubs: Brisbane, Auckland, Newcastle, St George/Illawarra and Wests/Balmain. Thus, the ten remaining clubs were applying for nine licences to field nine teams. The selection criteria governed eligibility for the nine licences, although it appears that Melbourne, as a regional club, was to enjoy some priority under the criteria. 227 Souths was notified on 15 October 1999 that it failed to secure admission to the 2000 NRL competition. The remaining clubs received three year licences on the same day. On 27 October 1999 NRL approved a joint venture of Manly and Norths. 228 It is plain that Souths was excluded from the NRL competition by reason of the fourteen team term. It was eligible, and ready, willing and able, to compete as it met the "Basic Criteria" but was not admitted into the competition as it received the lowest number of points under the selection criteria. 229 It is in the above context that the contracts, arrangements or understandings containing the fourteen team term need to be considered. The trial judge at [93]-[100] summarised the relevant contracts, arrangements and understanding as follows: "93. It is a matter of concession by News, NRLI and NRL that at or about 19 December 1997 there was an understanding between ARL and News as to their future conduct of a single premier rugby league competition, and it was a part of that understanding that the competition would be limited to fourteen teams in the year 2000. … 94. The premise of the understanding was that ARL and News (via Super League) would cease to conduct their existing competitions and would form a 50/50 partnership to own and control the proposed competition; that competition would be operated by a 50/50 joint venture company (then referred to as 'NRLC' or 'NRLC Co' but later as 'NRL'); and, to quote the Executive Summary in part, the 'Competition Structure' would involve (inter alia): · NRLC will grant licences to participate in the NRLC competition. … · 20 teams will be licensed to play in 1998 on a 1 year licence, but Brisbane, Newcastle and Auckland are assessed against criteria for 5 year licences. · 16 teams will be licensed to play in 1999. · 14 teams will be licensed to play in 2000. … · In a 14 team competition there will no less than 6 teams, and a maximum of 8 teams, from Sydney. · Conversely, there will be no less than 6 teams, and a maximum of 8 teams, from regions outside Sydney, being:

• Adelaide * North Queensland
• Melbourne * Newcastle
• Auckland * Gold Coast
• Canberra * Central Coast
• Brisbane'

95. It also was understood at the time, as stated in the News media release, that '[the] teams that will compete in the streamlined competition will be determined by strict criteria, to be agreed on by February 28, 1998'. … This theme of selection by reference to criteria is common both to the pre-19 December documentation as also to that culminating in the 14 May 1998 documentation that finally gave formal effect to the 'peace deal'.
96. Turning to the MoU and the Merger Agreement, I do not understand the respondents now to suggest that these two agreements did not give effect to the 19 December Understanding. The MoU, formally executed on 18 February 1998 after an iterative process that began at least shortly after 19 December 1997, was an agreement between ARL, NSWRL, News and Super League. As its 'Purpose' clause stated, it outlined the parties' then 'current understanding' on a merger of the two rugby league competitions. It confirmed the intention of the parties 'to negotiate and finalise all necessary agreements … to implement the Merger'. Clause 7 detailed the 'Competition Structure' including the fourteen team term in a near-final form. The MoU clearly was a carrying forward of - a giving effect to - the 19 December Understanding.
97. The Merger Agreement of 14 May 1998 was one of the complex of interlocking documents executed on that day that formalised the web of relationships of the various entities involved in the ownership, conduct, financing, etc, of the NRL competition. This agreement was between not only the parties to the MoU but also NRLI. Again this agreement carried forward, this time to finality, what was envisaged in the 19 December Understanding and the MoU. Indeed recital D of the agreement stated that it 'supersedes the Memorandum of Understanding'.
98. Insofar as presently relevant, the Merger Agreement's purpose was reflected in its recital B: 'The Parties wish to merge the ARL Competition and the Super League Competition, on the terms set out in this Agreement, so that there is one premier rugby league competition in Australia, called the NRL Competition, on and from the 1998 rugby league playing season in Australia.'
99. Because it contains the then definitive form of the agreed NRL competition structure including the fourteen team term, it is appropriate at this point to set out the provisions of cl 7 of the Agreement in their entirety: '7.COMPETITION STRUCTURE 7.1 The Parties agree that the structure of the NRL competition will be as set out in this clause 7 and each of ARL and NRLI agree to procure NRL to comply with this clause 7. 7.2 Before 30 June 1998, NRL must: (a) inform Clubs that no less than 16 teams, but no more than 20 teams (the actual number to be determined by NRL and approved by the Partners), will be entitled to Franchises in 1999, and not more than 14 teams will be entitled to Franchises in 2000; and (b) release the franchise criteria for 1999 and beyond. 7.3 No more than 20 teams will participate in the 1998 NRL Competition, each team being granted a Franchise for a term of one year. However, once the franchise criteria are determined, Brisbane, Newcastle and Auckland will be assessed by NRL against the franchise criteria and, if NRL is satisfied, the term of their Franchises will be extended to five years. 7.4 No less than 16 teams but no more than 20 teams, (the actual number to be determined by NRL and approved by the Partners), will participate in the 1999 NRL Competition, on varying terms depending on the level of satisfaction of the franchise criteria. These Franchises will be granted no later than 1 October 1998. NRL will be entitled to extend the term of Franchises at this time if it is in the best interests of the NRL Competition. 7.5 No more than 14 teams will participate in the 2000 NRL Competition on varying terms depending on the level of satisfaction of the franchise criteria. 7.6 Clubs entering into mergers or joint ventures before March 1998 with the approval of NRL are entitled to: (a) receive grants of $4 million per annum in respect of the merged club in 1998 and 1999 rather than a single $2 million grant under clause 7.12(a); and (b) a 5 year Franchise. 7.7 Clubs entering into mergers or joint ventures before 1 October 1998 with the approval of NRL are entitled to: (a) receive a grant of $4 million in 1999 rather than a single $2 million grant under clause 7.12(a); and (b) a 5 year Franchise. 7.8 On or before 1 October 1999 NRL must determine the Franchisees for 2000 (there being no more than 14 Franchisees). 7.9 In a 14 team NRL Competition, there will be no less than six teams, and a maximum of eight teams, from Sydney. Conversely, there will be no less than six teams, and a maximum of eight teams, from regions outside Sydney. 7.10 Until 2001, the regions outside Sydney are: (a) Adelaide; (b) Melbourne; (c) Auckland; (d) Canberra; (e) Brisbane; (f) North Queensland; (g) Newcastle; (h) Gold Coast; and (i) Central Coast. 7.11 The Parties recognise that it is in the best interests of rugby league to prioritize the grant of Franchises, for example, to encourage: (a) mergers of Sydney clubs; and (b) a national competition. If the number of applicants satisfying the franchise criteria exceed the number of available Franchises, the grant of available Franchises will be determined in the following order of priority: (a) merged clubs; (b) regional clubs; and (c) stand alone Sydney clubs. Otherwise, NRL will determine the grant of Franchises on the level of satisfaction of the franchise criteria. 7.12 A Franchise will entitle each Franchisee to: (a) an annual grant of $2 million from NRL; and (b) the payment of all travel costs and accommodation for the 1998 and 1999 NRL Competition seasons. The payment of travel and accommodation costs for 2000 and beyond will be reviewed by NRL in 1999. 7.13 Each of ARL, NRLI and News must make its decisions on the franchise criteria, the grant (or withdrawal) of Franchises, and any other matter to be determined under this clause 7 and, when executed, the Franchise Agreements, in the best interests of the NRL Competition, disregarding any conflicting (or potentially conflicting) interests, such as interests in Franchisees.'" 230 Souths, in its Particulars, relied upon cll 7.1, 7.2, 7.5, 7.8 and 7.10 of the Merger Agreement as particulars of the fourteen team term. In its Particulars of the fourteen team term as formulated in the February 1998 MoU, Souths also relied upon cl 7.9 which was in the same form as cl 7.9 of the Merger Agreement. 231 The trial judge found at [104] that, subject to consensual variation, the fourteen team term was intended to express "what for the future was to be the status quo" for the NRL competition. The finding was amply supported by the evidence. In particular, under the Services Agreement, pursuant to which NRL was appointed by the NRL partners to manage the NRL competition, NRL was obliged not to grant any more than "14 Franchises in 2000 or in any year thereafter (without the approval of the NRL Partnership)" (cl 3.3(e)) and to "comply with clause 7 of the Merger Agreement unless otherwise directed by the [NRL] Partners" (cl 3.3(h)). 232 The parties argued the case on the basis that there was little, if any, significance in the changes to the form of the fourteen team term in the December 1997 Understanding, the February 1998 MoU and the Merger Agreement. It appears to have been accepted that the purpose of the term did not change and that, in any event, the February 1998 MoU and the Merger Agreement gave effect to the December 1997 Understanding. Nevertheless, it is relevant to note that when the merged competition commenced for the 1998 NRL season on 13 March 1998, it did so on the basis of the February 1998 MoU. 233 At the outset it is appropriate to dispose of the questions of whether the NRL partners were competitive with one another, whether they intended to supply and acquire the relevant services and whether a defence is available to the NRL partners under s 45(6) of the Act. 234 The trial judge (at [196]) concluded that at the time of the December 1997 Understanding, News and ARL were "actually competitive" in relation to the services to which the alleged exclusionary provision related, and that that satisfied the requirements of s 4D(2). For the reasons given by the trial judge and by Heerey J at [110]-[116] I agree with that conclusion. As the subsequent February 1998 MoU and the Merger Agreement gave effect to the December 1997 Understanding, that conclusion is dispositive of this issue for the purposes of s 4D(1) and (2). 235 In any event, the evidence establishes that, but for the February 1998 MoU and the Merger Agreement, at the date of each of those agreements News and ARL would be likely to have been in competition with each other in relation to the relevant services, in the sense that there was a "real chance or possibility" that they would have been in competition with each other: see News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 564-565. 236 The respondents also argued before the trial judge and on the appeal that the services the subject of the alleged exclusionary provision were to be supplied or acquired by NRL as an independent contractor, with the consequence that those services would not be supplied or acquired by News or ARL and therefore would not be supplied or acquired by any of the parties to the contract, arrangement or understanding. For the reasons given by the trial judge (at [147]-[163]) and by Heerey J (at [107]-[109]) this argument must be rejected. 237 I would add that, as with the competition issue under s 4D(2), the time at which this issue is to be determined is the date of the relevant contract, arrangement or understanding. As the Merger Agreement and the February 1998 MoU gave effect to the December 1997 Understanding, it would be sufficient for Souths to establish that, at the date of that Understanding, the fourteen team term had the purpose of preventing, restricting or limiting the supply or acquisition of the relevant services by News and ARL. The determination of that issue is essentially one of fact, rather than of law. The trial judge found against the respondents on that question of fact on each of the three relevant dates in any event. Although the trial judge expressed greater doubt about his conclusion as to agency as at the date of the Merger Agreement, it is clear at [147] that he had little doubt that, at the date of the December 1997 Understanding, "the factual relation to which parties were then intending to commit themselves…had the characteristics of that of principal and agent". 238 Further, there is also an issue of whether, in any event, NRL is a body corporate that is related to News (or NLRI) and ARL for the purposes of s 4D(1). Although s 4D(1) is, relevantly, concerned with the supply or acquisition of services by all or any of the parties to the contract, arrangement or understanding the sub-section provides that if a party is a body corporate, the supply or acquisition of services by a related body corporate is equivalent to supply or acquisition by the party. Read together, ss 4A(1) and 4A(5) provide that a body corporate is related to another body corporate if, inter alia, it controls the composition of the board of directors, or holds more than one half of the allocated share capital, of the other body corporate. There is some force in the contention that, for the purposes of ss 4D(1) and 4A(5), the singular can include the plural (see s 23(b) of the Acts Interpretation Act 1901 (Cth)) with the consequence that where, as in the present case, two parties to the contract, arrangement or understanding (News and ARL) together control the composition of the board and own all of the allocated capital of the other company (NRL), then the other company is a company related to the parties to the contract. If the contention of News and ARL, that they are not related to NRL, were to be accepted, s 4D could be easily circumvented by competitors establishing an "independent contractor", which they wholly own and control, to prevent, limit or restrict the supply or acquisition of goods or services for an exclusionary purpose. In view of the conclusions I have reached on agency it is unnecessary to further pursue this question. 239 News, ARL and NRL also relied upon s 47(4) of the Act as a defence to Souths' claims under s 45(2) of the Act. They contend that giving effect to the fourteen team term would, but for the operation of s 47(10) (which imposes a competition test), fall within s 47(4) with the consequence that s 45(2) does not apply (see s 45(6)). It is contended that, on Souths' case as pleaded, ARL and News engaged in the practice of exclusive dealing as they acquired services from NRL on condition that NRL will not supply its competition organising services to the particular persons or classes of persons relied upon by Souths. 240 For the reasons given by Heerey J (at [117]-[123]) I agree that, if Souths succeeds in its claim that the fourteen team term is an exclusionary provision, s 47(4) of the Act will not avail News, ARL or NRL. 241 I would add that there was a degree of unreality about the s 47(4) defence which, unlike s 4D(1), is concerned with "the condition" on which services are acquired, rather than with the purpose of any of the parties. Irrespective of agency, as between News, ARL and NRL, the condition on which NRL was to supply its competition organisation services was that it was to supply them as directed from time to time by News and ARL: see cll 3.1(d), 3.3(e) and 3.3(h) of the NRL Services Agreement. Thus, although particular persons or classes of persons may have been the objects of the purpose of the NRL partners in agreeing to the fourteen team term, in their contractual arrangements with NRL they retained complete control over the persons to whom licences or franchises to participate in the NRL competition were to be granted. Thus, the requirement of particularity in s 47(4)(c) is not met. 242 That leads me to the two issues on which the outcome of the appeal turns; purpose and particular persons and classes of persons. 243 The purpose, of which s 4D speaks, requires consideration of the subjective purpose or purposes of the party or parties as a result of whose efforts the alleged exclusionary provision was included in the relevant contract, arrangement or understanding: see ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 ("Pont Data") at 474-477. In distinguishing between the purpose and effect of a contract, arrangement or understanding for the purposes of s 45 of the Act, the Full Court in Pont Data at 475 cited the following statement of the Judicial Committee in Newton v Commissioner of Taxation (Cth) [1958] AC 450 at 465 (which related to s 260 of the Income Tax Assessment Act 1936 (Cth)): "The word 'purpose' means, not motive but the effect which it is sought to achieve - the end in view. The word 'effect' means the end accomplished or achieved." The dictionary definitions of purpose cited by Heerey J at [65] include: "an intended or desired result; end or aim" (Macquarie) "an object to be attained, an intention, an aim" (New Shorter Oxford) 244 In Dowling v Dalgety Australia Limited (1992) 34 FCR 109 at 134 Lockhart J spoke of the motivation and the reasons of the parties for introducing the relevant provision. 245 Whichever phraseology is employed, the Court is required to consider, as a question of fact, the effect sought to be achieved or the result intended by the inclusion of the alleged exclusionary provision. Section 4D(1) mandates that the focus of the enquiry be the provision in question, rather than the contract, arrangement or understanding in which it was included. This distinction is critical as often the overall result or effect intended by a contract will be quite inconsistent with the result or effect intended by a particular provision in the contract. For example, when parties include a provision for a property settlement in the event of a marriage breakdown as part of a marriage contract, it is plain that the purpose of the contract and of the settlement are inconsistent with each other. The purpose of the contract is a marital relationship "until death do us apart" but the purpose of the provision for the settlement is "but if that is not to be so then the settlement ensues". 246 I accept, as Heerey J states at [71], that the recognition of a possible outcome detracting from the desired or intended purpose does not alter the nature of the purpose. In support of that proposition his Honour proffers the example of a surgeon conducting a high risk operation to save a patient's life. His Honour notes that the surgeon does not have the purpose of causing the patient's death in the event that that recognised risk materialises. However, the example may be taken a little further. If the surgeon's contract with the patient contains a clause excluding liability for death in the event of that risk materialising, one will get quite different answers to the question of the purpose of the contract (to enable the patient to live) than to the purpose of the exclusion clause (but if the patient dies, the surgeon is not to be liable). 247 Interestingly, in the present case little attention has been given to the addition in s 4D(1)(b)(ii) of the words "in particular circumstances or on particular conditions". Those additional words would appear to embrace a "but if" situation (particular circumstances) or exclusion on certain conditions (particular conditions). 248 Finally, s 4F provides that a provision shall be deemed to have had a particular purpose where the purpose is one of several purposes, provided that the particular purpose "was or is a substantial purpose". 249 In Peter Williamson Pty Ltd v Capital Motors Ltd (1982) 61 FLR 257 at 265, Franki J stated: "…it is not possible to place precise limits on the meaning of the word 'substantial' in s 4F. I consider that the proscribed reason in s. 96(3)(d) must be one which is of real significance in the decision to withhold supply of goods, or to adopt the words of Barwick C.J., an 'operative' reason". 250 Burchett J considered the meaning of "substantial" in s 4F in News Limited v Australian Rugby Football League Limited (1995) 58 FCR 447 at 521 - 523. His Honour said at 521: "…the necessity to find a 'substantial purpose' ensures that a process of evaluation must be undertaken, which rejects any mechanical application of the section, and looks at the importance of the alleged purpose as a factor that produced the inclusion of the provision". and concluded at 523: "But, in whatever context it is used, the authorities I have cited suggest [substantial] connotes real significance." 251 On appeal in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 576 ("News Ltd") the Full Court discussed competing views of the meaning of "substantial" in s 4F although, in the result, found it unnecessary to resolve the question. The Full Court noted that in Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 Lockhart J reiterated his view that "substantial" means considerable or large, rather than the lower threshold of "real or of substance and not insubstantial or nominal" cf Tillmanns Butcheries Pty Ltd v Australiasian Meat Industry Employees' Union (1979) 42 FLR 331 at 348. 252 The concept of substantiality is used in the Act in different contexts. A substantial lessening of competition (see s 45(1), for example), involves a quantitative evaluation, while the meaning of "substantial" in the context of purpose in s 4F involves a qualitative evaluation. In the context of s 4F I regard a substantial purpose as meaning a significant operative purpose. As questions of fact, degree and evaluation are involved it is not helpful to seek to be more precise. However, as I later explain, in the present case the same result follows from each of the meanings of substantial discussed in News Limited, with the consequence that it is unnecessary to finally resolve which of the competing views is to be adopted. 253 Souths criticised the trial judge's approach to purpose, contending that his Honour failed to maintain the requisite distinction between the purpose of the fourteen team term and the purpose of the contract, arrangement or understanding. Souths argued that his Honour's reasoning "confuses the purposes of the Understanding with purposes of the provision, which was to achieve the desired 'end' by the particular means of not supplying competition organising services to (or acquiring team services from) more than 14 teams from 2000, and more than 8 from Sydney". 254 Souths pointed to the observation of Lockhart J in Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159 at 209 that s 4D is concerned with any provision of a contract, arrangement or understanding between competitors that has the proscribed purpose. Thus, so it contended, the trial judge was in error in failing to confine his enquiry to the purpose of the parties' inclusion of the fourteen team term in their contract, arrangement or understanding. 255 The respondents contend that his Honour addressed the purpose of the fourteen team term provision relied upon by Souths and correctly concluded, as a matter of fact, that there was not only no evidence of any exclusionary purpose but, rather, there was an inclusionary purpose - that is, that all existing clubs be induced to participate in the merged NRL competition. 256 Souths did not dispute, as was found by the trial judge (see [270] and [276]), that a purpose of the fourteen team term was to achieve the overall objective of News and ARL of bringing together the separate ARL and Super League competitions as a unified competition. This unification was desired because there was: · a need to "establish a financially viable and sustainable competition"; · a "wish to avert continuing damage to the game"; · a "need both to satisfy and to respond to the pressures and demands of the media companies on whose financial support both the several and the proposed competitions had relied or would rely for their survival". 257 The trial judge considered (at [271]-[276]), that the vehicle chosen to achieve those objectives, which included the reduction of the number of Sydney teams to ensure the viability and national character of the competition, found its definitive expression in cl 7 of the Merger Agreement. In that regard the noteworthy characteristics of cl 7, as a means to the end sought to be achieved, were stated by his Honour (at [272]) to be: "(a) a progression from no more than twenty, to no more than sixteen, to no more than fourteen teams in 1998, 1999 and 2000 respectively - the 1998 figure giving all of the by then continuing ARL and Super League clubs (two had already dropped out from the 1997 number) an equal opportunity to participate in the rationalisation process; (b) provision for the national character of the competition - this to be secured through the 8-6/6-8 split; (c) the positive incentives given for entering mergers and joint ventures; and (d) the priority order in the grant of franchises, this being merged clubs, regional clubs and 'stand alone' Sydney clubs." 258 His Honour (at [275]) stated that the purpose of including the fourteen team term, which he referred to as "one of the defining characteristics of the new competition", was that "fourteen teams provided the appropriate maximum number to achieve [the parties overall objectives]". His Honour then concluded at [276] that "the fourteen team term (including the 8-6/6-8 split) was included in the 19 December Understanding for the purpose of achieving [those] objectives" (which for convenience I will refer to as the viability and sustainability of a national competition). 259 The trial judge accepted that the fourteen team term had the clear and intended effect of preventing the NRL partners from supplying the relevant services to, or acquiring the relevant services from, a greater number of teams than the numbers fixed in their contract, arrangement or understanding. His Honour also accepted that: · the foreseen consequence was that if more than the agreed number sought admission the excess would be denied the relevant services (at [269]); · the fourteen team term "limited, and was intended to limit, the number of teams to which the partnership would provide its services and from which it would acquire services" (at [279]). 260 Nonetheless, his Honour concluded at [277]-[286] that the fourteen team term had no purpose other than achieving the viability and sustainability of a national competition: "277. Can it be said, though, that this was the only (hence only substantial) purpose for the inclusion of the term? In his judgment in the interlocutory proceeding when responding to the submission that the term was not included for the purpose of excluding anyone but that exclusion was an incidental and unwished for outcome, Hely J said ((1999) 169 ALR at 132): 'I do not agree. One of the motivations behind the inclusion of the 14 team term in the arrangements was to restrict the supply and acquisition of the services to which the term relates to 14 clubs, in order to establish a viable and sustainable competition. This is not to confuse purpose with effect. It is merely an acknowledgment of the reality of the situation. The purpose of the 14 team term was not merely to achieve the desired 'end', but to do so by particular means. For this reason it cannot be said that the only purpose of the provision is the establishment of a viable or sustainable competition.'

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

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

267 The trial judge found that the fourteen team limitation was chosen in order to achieve the overall objective of the NRL partners of a viable and sustainable national competition. His Honour also found that the clear and intended effect of the term was that the NRL partners would not supply or acquire the relevant services to or from any more than "fourteen teams". Of course, the parties were more flexible on the team numbers up to 2000 in order to allow all clubs extra time in which to form mergers and joint ventures. 268 It is fairly clear from the evidence of the three witnesses that News, rather than ARL, insisted on the fourteen team limitation. Although ARL's own research favoured the same limitation, ARL, through Mr Whittaker, considered that there might be "too much pain" in getting the competition down to fourteen teams and, as a result, ARL sought to have the merged competition provide for up to sixteen teams in 2000 and beyond. Plainly, ARL sought a sixteen team term in order to reduce or eliminate the prospect of exclusion. Mr Frykberg's response was that the fourteen team limitation was not negotiable. The trial judge at [275] found that the figure was "dogmatically" insisted upon by News and "reluctantly" accepted by the ARL. In those circumstance the purpose of News, at whose insistence the term was included, rather than ARL, may be the relevant purpose. However, as I later explain, little turns on that distinction. 269 The trial judge found at [253] that Mr McCourt accepted that: · the process of reducing the teams to fourteen in 2000 had to be buttressed by some provision for choosing the fourteen teams to be included, and for excluding a club or clubs if too many were seeking selection; · the purpose of excluding by criteria a club or clubs, if more than fourteen applied for admission to the 2000 competition, was central to the merger agreement entered into by the NRL partners. Mr McCourt was cross-examined by Mr Hughes QC, senior counsel for Souths: "MR HUGHES: While you were negotiating the arrangement that was announced on 19 December 1997 was it apparent to you that the process of reducing the number of teams in the premiership competition to 14 by the year 2000 had to be buttressed by some provision for excluding a club or clubs if there was one more club or more than one club too many seeking admission for 2000?---Yes. Therefore as at 19 December 1997 will you agree it was from your perspective essential to have some exclusory process of the kind with which you've just agreed included in the arrangement?---Yes, there had to be a way of choosing 14 teams. And that has always been the position as you've understood it from the time you participated in the negotiations up to 15 October, 1999, is that right?---Yes. … MR HUGHES: The purpose of excluding by criteria a club or clubs if more than 14 applied for admission to the 2000 competition was central to the operation of the peace deal announced on 19 December 1997, was it not?---Yes, I think it was, but I---" 270 Although it was Mr Frykberg's "fervent view" that the fourteen team competition could be achieved by mergers or joint ventures without resort to exclusion, he accepted that it was an essential element of the 19 December 1997 Understanding that, in the absence of being able to reach a fourteen team competition voluntarily, the selection criteria was the mechanism to arrive at the agreed number: see [256] of the trial judge's reasons. Mr Frykberg was also cross-examined by Mr Hughes QC as to purpose: "From your perspective, as at 19 December 1997, was it essential to the effective operation of the arrangements made between you and Mr Whittaker and others in the negotiations that there should be an effective mechanism to determine which clubs would and which clubs wouldn't be admitted to the 2000 competition, consisting of 14 teams, if there were to be as things turned out more applicants for places in that competition?---Yes, that was the effect of the agreement. That was, would you agree, an essential element in the agreement reached on 19 December or before 19 December 1997?---It was an essential element of the agreement that there be in the absence of being able to reach a 14 team competition naturally that there be a mechanism in place which would arrive at a 14 team as agreed by both sides. I beg your pardon?---As agreed by both sides. And that effective mechanism, to provide for the contingency that there would be more applicants for entry to the premiership competition in 2000 than available places, was a mechanism based upon, as you understood the position in December 1997, the formulation of admission criteria, is that right?---Yes. Will you agree that the criteria that you and Mr Whittaker discussed between yourselves with Mr Lockwood and Mr McDonald and Mr McCourt in the course of the negotiations were criteria that would be drawn up later, is that right?---Yes. But would be criteria providing for the ranking of clubs for admission or exclusion purposes if there should be a surplus of applicants over available vacancies?---That was the effect of it. We didn't discuss it in that such detailed way, but that would be the effect of it, yes." 271 Mr Whittaker's evidence was to the same effect. In cross examination Mr Whittaker accepted that a "fundamental" part of the merger agreement was the formulation of the criteria to determine who would participate from 2000 onwards if there were more than fourteen teams seeking entry. 272 The trial judge found that there was no purpose to the fourteen team term other than achieving the NRL partners' overall objective of a viable and sustainable national competition. His Honour said at [285] that the fourteen team term was "only a means" to achieving the NRL partners overall objective. His Honour (at [280]) did not regard the number selected as significant; he said any competition would have a maximum number of teams. However, in the present case the precise number was regarded by the NRL partners as significant. It appears that Mr Whittaker unsuccessfully sought a sixteen team limit as he expected that that limit would probably avoid any exclusion, with the consequence that with that limit there may have been no exclusionary purpose. News, however, required the fourteen team limit as a buttress or sanction to secure exclusion if the merger and regional provisions failed to achieve their objective of fourteen teams. It is the exclusionary purpose of the fourteen team term, rather than any other, that is in issue in the present case. 273 His Honour also drew some support for his conclusions from his finding that there were no other means available to achieve the NRL partners' objective. If there was an absence of any other means, which is not self-evident, that only serves to emphasise the significance attached by the parties to the means chosen by them to secure their objective. If, however, his Honour was seeking to import some rule of reason or, put another way, to treat as relevant a public benefit in securing the merger or its objectives by limiting the competition to fourteen teams, that can be of no relevance to whether the fourteen team term is an exclusionary provision. Public benefit is relevant to whether, under s 88(1)(b) of the Act, an authorisation should be granted in respect of an exclusionary provision on the ground that the provision has resulted or is likely to result in such a benefit to the public that the contract, arrangement or understanding of which the provision forms part should be given effect to: see s 90(8)(b) of the Act. As the NRL partners did not apply for an authorisation, the issue of public benefit or the lack of any other means of achieving the partners' objectives is not relevant to whether the fourteen team term is an exclusionary provision. 274 The trial judge's conclusion that the fourteen team term was only a means to an end did not absolve him from determining the purpose of the means selected; whether it was a substantial purpose and, if so, whether it was a proscribed exclusionary purpose. 275 The problem of distinguishing between the purpose of the means selected to achieve the end and the end itself is not new. In Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 ("Jewel Food Stores") the Full Court, in the context of a claim of contravention of s 45D of the Act, considered whether the purpose of certain milk vendors, in denying supply to Jewel Food Stores (a large retailer), was to protect their businesses (the ultimate end sought) or to cause harm to Jewel Food Stores (the immediate means selected). Sheppard and Wilcox JJ, in deciding that it was no defence to say that the immediate purpose of inflicting harm was not a substantial purpose because it was not the ultimate purpose of the conduct in question, said at 134-135: "The only relevant question is whether, despite the existence of that [ultimate] purpose, the respondents had, as a substantial purpose, the infliction of damage upon the business of the appellant. As we see the case, there can be no doubt that the respondents possessed such a purpose. It is true that this purpose was an immediate purpose rather than an ultimate purpose, but it is too late in the day to contend, at least in this Court, that the only type of purpose which may satisfy a description in s 45D(1)(b) is an ultimate purpose. The point was made in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331. In that case Bowen CJ, with whom Evatt J agreed, dealt with duality of purpose in this way (at 338): 'Nevertheless, the fact that a union and its members acting together have a union purpose does not necessarily exclude the possibility that they had, also, the purpose of causing substantial loss or damage to the business of a corporation. The statement of Evatt J in McKernan v Fraser (1931) 46 CLR 343 is apposite. His Honour in that case (at 403) said: 'Sir Godfrey Lushington said, in special reference to combined action against employers or non-unionists on the part of unionists, that to ask the question whether they act to defend their own trade interests or to injure their economic adversary for the time being is equivalent to asking of a soldier, who shoots to kill in battle, whether he does so for the purpose of injuring his enemy or of defending his country. The analogy is sound because combined strike action is usually undertaken for the purpose both of causing harm to the employers and for the improvement of maintenance of the standards of unionists.'' … Ordinarily, the purpose of inflicting damage upon the business of a person is to cause that person to modify its behaviour in some way for the advantage of the person occasioning the damage, or its members. In other words the damage is a means to an end. Consequently, although a primary purpose of the milk vendors was to protect their own businesses, another purpose which they had was to damage or injure the appellant's business. That was the means by which they intended to achieve their primary purpose. Upon the view of s 45D(1) long accepted in this Court, that is enough." 276 Although the decision of the Full Court was reversed on appeal on a different issue (see Devenish v Jewel Food Stores Pty Limited (1991) 172 CLR 32) nothing was said that would cast doubt on the above passage. 277 A similar situation arose in Pont Data which I discuss in more detail later in these reasons. In that case the ultimate purpose of the respondent, ASX, was to prevent and deter competition in the wholesale and retail markets respectively for certain information services. The means selected by ASX to achieve that purpose was to require persons who wished to acquire the information services to, inter alia, agree to restraints that prevented them from reselling the information. The exclusionary purpose of the means selected by ASX led the Full Court to conclude that that means constituted an exclusionary provision irrespective of whether ASX's ultimate purpose was a proscribed exclusionary purpose for the purposes of s 4D(1). 278 An analogous approach can be taken with respect to the fourteen team term. The ultimate purpose of the term (the end) is the achievement of a viable and sustainable national competition, but its immediate purpose (the means) is to exclude any clubs or entities in excess of the fourteen selected to provide teams to participate in the 2000 NRL competition. Put another way, the immediate purpose is to limit or restrict the supply or acquisition of the relevant services to or from (as the case may be) the fourteen clubs or entities selected to provide the fourteen teams. The ARL partners' contention that the possibility of exclusion as a result of the fourteen team term was an "undesired consequence" of the term incorrectly focuses on the purpose of cl 7 rather than on the purpose of the fourteen team term. 279 Of course, in Jewel Food Stores the purpose of the means employed was to cause immediate injury or harm to secure the ultimate end sought to be achieved. Similarly, in Pont Data the means was immediate and direct. In the present case the purpose of the means employed was to exclude, but only if exclusion was required because there were more than fourteen clubs or entities seeking to provide teams to participate in the 2000 NRL competition. If the case were to be decided under s 4D(b)(i) an issue might arise as to whether the purpose of the fourteen team term was truly exclusionary, as the exclusionary outcome was qualified by the intent that it occur in the circumstance that the inducement to clubs to merge, or to regional clubs to enter the competition, failed to reduce to fourteen the number of clubs or entities applying to participate in the 2000 NRL competition. However, as explained above, s 4D(1)(b)(ii) extends the proscribed exclusionary purpose to one that may be operative in "particular circumstances". Thus, the fact that the exclusionary outcome was intended to bring about certain consequences in particular circumstances (that is, where there were more eligible clubs or entities applying than licences available) does not take the fourteen team term outside of the operation of s 4D(1)(b)(ii). 280 As noted earlier, little attention was given to the significance of the additional words in s 4D(1)(b)(ii). Nonetheless, it is quite clear the case was contested by the parties on the basis that it was always Souths' case that the exclusionary purpose was intended to be operative in the circumstance that there were more applicants than teams. The trial judge stated Souths' case in those terms (at [263]) and found (at [269] and [283]) that there "can be no controversy" that exclusion was an intended effect and foreseen consequence in that circumstance. Indeed, that conclusion followed from the evidence given by Messers Frykberg, McCourt and Whittaker. 281 While that particular circumstance may not have been expressly stated in Souths' pleadings it was plainly implicit as it was the only circumstance in which the fourteen team term could have, or be intended to have, an exclusionary outcome. Further it was, and remained, Souths' case that the fourteen team term was an exclusionary provision within the meaning of s 4D(1) of the Act. Indeed, the trial judge's finding that the term was not an exclusionary provision was Souths' first ground of appeal. 282 In all the circumstances I am satisfied that the issue of whether the fourteen team term was an exclusionary provision, as defined in s 4D(1) of the Act, was "fairly fought out" at trial and on appeal (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 417). Thus, even if I am in error in concluding that the "particular circumstances" element in s 4D(b)(ii) was implicit in the pleading, it was nonetheless one of the issues litigated at trial and on appeal: see Water Board v Moustakas (1988) 180 CLR 491 at 497. 283 On the issue of substantiality of purpose the trial judge accepted that the means chosen to achieve the fourteen team limitation was one of the "defining characteristics of the new competition" and "a fundamental element of the peace deal" between the ARL and News. It is clear the exclusionary purpose of the provision, the "buttress" to secure the fourteen team outcome, was a significant operative purpose and therefore, in my view, a "substantial" purpose. Even if substantiality requires a higher threshold such as "considerable or large", I am satisfied that the evidence accepted by the trial judge established that the exclusionary purpose was a substantial purpose of News, the party through whose efforts the fourteen team term was introduced. The exclusionary purpose was also, albeit more reluctantly in the events that occurred, a substantial purpose of ARL. 284 However, I agree with the trial judge that under s 4D(1) any exclusionary purpose, and the objects to which it is directed, are parts of "a composite whole". Accordingly, determination of the issue of exclusionary purpose requires consideration of the objects of that purpose. 285 Souths' case was one of prevention of the supply or acquisition of the relevant services to or from a particular class of persons, and the restriction or limitation of the supply or acquisition of the relevant services to or from particular persons. The particular class of persons pleaded was, in substance, the existing ARL and Super League clubs and any other top level rugby league clubs that wished to be included in, but were excluded from, the fourteen team 2000 NRL competition. 286 Of course, the finalised version of the selection criteria, which would lead to exclusion, was not published until 8 September 1998. The stated aim of the finalised criteria was to "create and maintain a viable national competition" by applying criteria for inclusion in the competition "in a fair and reasonable manner". While it is correct that the criteria were not in existence at the time of the contracts, arrangements and understandings relied upon by Souths, I do not regard anything of significance as turning upon that fact. It is clear that the aim stated in the finalised criteria fairly stated what was always intended by the NRL partners, namely that if there were more clubs than licences available, the clubs that were to be excluded from the 2000 NRL competition were those who were least able to satisfy the criteria that were to be designed by the NRL partners to ensure what they considered to be appropriate to achieve a viable and sustainable national competition. 287 One of the main issues on this appeal concerned whether the clubs or entities intended to be excluded from the competition, by reason of failing to meet the selection criteria are members of a particular class of persons. The distinction between a class of persons and a particular class of persons, in the context of s 4D, was considered by the Full Court in Pont Data. Pont Data was a subscriber for information within the exclusive control of ASX. The information (known as Signal C) related to the trading operations of the stock markets conducted by ASX or its subsidiaries and other sources. ASX (which, for convenience, I treat as including its wholly owned subsidiary ASXO) was a competitor of Pont Data in relation to the supply of such information. ASX required Pont Data to enter into supply contracts which required Pont Data to disclose to ASX the names of its customers. In order to receive the information, the customers ("licensees") were required to enter into a tripartite agreement (the "Dynamic Agreement") with ASX and Pont Data under which the licensees were restricted as to the use of the information and, in particular, as to reselling it. Pont Data was not to sell the information to any person other than a licensee. Pont Data alleged, inter alia, that the Dynamic Agreement contained an exclusionary provision. 288 The Full Court looked at the subjective purposes of ASX, the party as a result of whose efforts the exclusionary provision was included in the Dynamic Agreement. The trial judge found the restriction imposed on Pont Data that it require licensees not to resell the information to have had the purpose of preventing, restricting or limiting the supply of information services by Pont Data to any person other than a licensee restricted under the Dynamic Agreement from reselling the information. 289 The Full Court dealt with the s 4D claim at 487-488: "The submission for Pont was that: (i) Pont and ASXO (alias JECNET) as parties to the Dynamic Agreement were competitors in relation to the sale of the information contained in Signal C; (ii) That agreement obliged one of the parties, Pont, not to sell or supply the information, whether alone or with other information, to any person other than the Licensee; and (iii) Having regard to the finding of the primary judge as to purpose, when dealing with s 46(1)(c), it is clear that those provisions had the purpose of preventing or restricting or limiting the supply of services by Pont to any person other than a Licensee who was a party to the agreement in question. In this connection, Pont pointed to cl 3(2), and 3(6) of the Dynamic Agreement; no complaint was made as to the provision dealing with price. In response, the appellants [ASX] referred to the form taken by s 4D before it took its present form after it was amended by s 6 of the Trade Practices Revision Act 1986 (Cth), which inserted the words 'or classes of persons' after 'particular persons'. The amendment appears to have been made in the light of what had been said as to the limitations upon the phrase 'particular persons' in Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 473, and in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 75-76. The result would appear to broaden the definition of s 4D by going from particular persons to particular classes of persons. However, in a submission having an unpleasing resonance of the class-closing rules and of distinctions between general, special and 'hybrid' powers of appointment, the appellants contended that the restraints upon the use of the Signal C information by persons other than those bound into the Dynamic Agreement as 'Licensees' could not have the purpose of preventing, restricting or limiting the supply of services to a 'particular' class of persons, or the acquisition of services by a 'particular' class of persons. It was said that the persons or classes excluded must still be 'identified' if s.4D is to apply. That may be conceded, but they are identified, in the present case, by the characteristic that they may not be supplied with the information in question, unless they accept and become bound by the restraints imposed by the Dynamic Agreement. Such persons come within a particular category or description defined by a collective formula: cf Pearks v Moseley (1880) 5 App Cas 714 at 723. They ordinarily would be treated as constituting a particular class, even though at any one time the identity of all the members of the class might not readily be ascertainable. What distinguishes the class and makes it particular is that its members are objects of an anti-competitive purpose, with which s. 4D is concerned. As we understood the argument for the appellants, if their submission as to the construction of the phrase 'particular persons or classes of persons' was not accepted, and if, as has proved to be the case, the Court upheld the holding of the primary Judge as to 'purpose' in the setting of s 46 (1)(c), that holding also provided a sufficient footing for a holding of 'purpose' for s. 4D. In the result, we would accept the submission for the respondent [Pont Data] that its case on s. 4D has been made good." 290 In the application for interlocutory relief in the present matter ((1999) 169 ALR 133) Hely J stated at [76]: "The respondents submitted that the distinguishing feature of the class cannot be the fact of exclusion itself. In other words, in order for persons the target of an exclusionary provision to be a class, there must be a common feature distinguishing those persons other than the mere fact of them being subjects of exclusion. It may be thought that there is some force in this submission. However, Pont Data provides otherwise: a class may be identified by reference to the fact that its members may not be supplied with services unless those members accept and become bound by restraints imposed by, in that case, the supply agreement. This suggests that the unifying characteristic of a group can include the fact of exclusion itself. Here, the unifying characteristic of the group is that the relevant clubs were participants in the 1997 competitions, and are not within the groups to be carved out therefrom." 291 On one view, as pleaded, the defining factor that distinguishes the class intended to be excluded from the 2000 NRL competition, and makes it particular, is the fact of exclusion. However, in the present case it is more accurate to identify the distinguishing exclusionary factor by reference to the reason for the intended exclusion, that is, a club's failure to meet the requisite level in the selection criteria for inclusion in the fourteen team NRL competition as from 2000 by reason of fourteen other clubs better satisfying the criteria. In Pont Data, where the subjects of the exclusionary provision were aimed at for a reason or purpose (in that case, ASX's anti-competitive purpose), the reason or purpose was found to be of assistance in defining or distinguishing the class excluded. 292 In each case it is necessary to identify the characteristic distinguishing the class in order to determine if it is sufficiently particular to constitute a particular class that is the object of an exclusionary purpose proscribed by s 4D(1). The fact of exclusion, without more, may not be a sufficient formula or distinguishing characteristic to identify the particular class intended to be excluded. 293 In Pont Data the main issue under s 4D(1) related to whether the class, the object of ASX's anti-competitive purpose, was a particular class. The immediate reason or purpose of ASX for the restraint imposed on the licensees was the anti-competitive purpose of preventing the reselling of information by restricting or limiting the information services to licensees willing to accept the restraint on reselling. Thus, the exclusionary purpose of preventing supply of the information services was directed at those unwilling to accept the restraint, namely, potential competitors in the relevant markets for the information. The Full Court regarded the particular characteristic of not being entitled to receive the Signal C information without signing the Dynamic Agreement as sufficient to enable the members of the relevant class to come within a particular category or description or to be defined by a collective formula and thereby constitute a particular class. The fact that at any one time the identity of all of the members of the class was not readily ascertainable did not prevent the class from being a particular class. The Court appeared to treat as significant the fact that the members of the class were the objects of ASX's anti-competitive purpose. 294 Souths claimed that, save that the NRL partners had an exclusionary rather an anti-competitive purpose, the present case falls within the principles acted upon in Pont Data. In my view it is more accurate to say that Souths' case is supported by the outcome in Pont Data. As set out above in my carrot and stick explanation, a significant effect or result sought to be achieved by the NRL partners by the fourteen team term was to prevent the supply or acquisition of the relevant services to or from such of the still existing ARL and Super League clubs, merged clubs (being new legal entities) or the regional clubs (including the new clubs that were intended to be established, Central Coast and Melbourne) as were eligible, and ready, willing and able, to participate in the NRL competition, other than the fourteen clubs or entities which best satisfied the selection criteria. The prevention of supply or acquisition was intended to be achieved by restricting or limiting the supply or acquisition of the relevant services to the fourteen clubs or entities which were eligible, and ready, willing and able, to participate in the competition and best satisfied the criteria for participation. The characteristic that identified and distinguished the class intended to be excluded from participation, and makes it particular, was that its members, the top level rugby league clubs eligible to participate (for example, by meeting the "Basic Criteria") but not achieving the requisite level in the selection criteria achieved by fourteen other clubs or entities, would not be supplied with team organisation services and team services would not be acquired from them. Accordingly, the particular class the subject of the NRL partners' exclusionary purpose has a distinguishing or identifying characteristic in addition to the mere fact of exclusion. As explained above, the evaluation of particularity in the context of s 4D(1) involves questions of fact and degree. Although the matter is not free of doubt, I have concluded that the objects of the NRL partners exclusionary purpose are sufficiently distinguishable and specific to constitute a particular class. 295 In summary, the class aimed at by the NRL partners' exclusionary purpose of preventing the supply or acquisition of the relevant services by or from the NRL partners was a particular class of persons for the purposes of s 4D(1). Analogously to Pont Data the proscribed exclusionary purpose of the NRL partners was to prevent supply or acquisition to or from a particular class of persons (the excluded class) by restricting or limiting supply or acquisition to or from the clubs or entities selected to be included in the 2000 NRL competition. Accordingly, Souths has established that the trial judge erred in dismissing its case in so far as it relied upon s 4D(1) of the Act. 296 Souths also argued that the fourteen team term had the purpose of restricting or limiting supply or acquisition of the relevant services to or from particular persons namely, the twenty remaining clubs that had participated in the 1997 ARL and Super League competition. I have some difficulty with the restriction or limitation case pleaded by Souths. In order to succeed, Souths must establish that the twenty clubs were the objects of the NRL partners' purpose to restrict or limit the relevant supply or acquisition of services. The evidence, however, does not appear to support that conclusion. Rather, as explained above, the persons in respect of whom the relevant supply or acquisition of services in the 2000 NRL competition was intended to be restricted or limited (by the services being reduced to fourteen teams) were such of the still existing twenty clubs, merged clubs or regional clubs that met the criteria to participate in the 2000 NRL competition. Thus, any such exclusionary purpose of limitation or restriction was directed at members of a class, rather than particular persons. 297 Finally, that brings me to the question of relief. Souths is entitled to declaratory relief that the making and arriving at of the December 1997 Understanding, the February 1998 MoU and the Merger Agreement, and the giving of effect to the fourteen team term contained in those contracts, arrangements or understandings, contravened s 45(2) of the Act. 298 However, before the trial judge and on appeal the principal remedy Souths sought was an injunction restraining News, ARL and NRL from excluding Souths from the NRL competition in reliance upon the fourteen team term. The form of the relief sought by Souths confuses two discrete issues; giving effect to the fourteen team term and Souths' entitlement to be included in the NRL competition. The former but not the latter issue is relevant to the appeal. A difficulty that has beset Souths' claim to injunctive relief to date stems from the fact that, implicitly if not explicitly, it appears to be seeking an order for admission into the NRL competition, an order to which Souths is not entitled as a matter of legal right. 299 Section 80 of the Act confers power upon the Court to grant an injunction where it is satisfied that a person is engaging, or proposing to engage, in conduct that constitutes or would constitute, inter alia, a contravention of the Act. As was explained in ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248, s 80 confers a very broad discretion on the Court which, although devoid of traditional equitable constraints, must be exercised judicially, appropriately and consistently with the policy of the Act: see Lockhart J at 256, Gummow J at 267 and French J at 268. See also Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 203-204. 300 It follows from my conclusion on Souths' s 4D(1) case that when it commenced its proceeding in the Court, subject to any relevant discretionary considerations, its entitlement as a matter of legal right was to restrain News, NRLI, ARL and NRL from giving effect to the fourteen team term (s 45(2)(b) of the Act). The NRL partners and NRL have continued to give effect to the fourteen team term in their respective roles in conducting and operating the NRL competition from and since 2000. As explained earlier in these reasons I agree with the trial judge's conclusion that the fourteen team term was intended to express "what for the future was to be the status quo". Accordingly, in the absence of appropriate injunctive relief, if Souths applied for a licence to participate in the 2002 NRL competition it would again be prevented from being granted the licence by reason of the fourteen team term. In these circumstances, the injunctive relief to which Souths is, prima facie, entitled is an injunction to restrain News, NLRI, ARL and NRL from giving effect to, or continuing to give effect to, the fourteen team term. That relief does not require that Souths be included in the 2002 NRL competition nor does it require that the NRL competition be a fifteen team competition. Rather, the relief would remove the unlawful fetter of the fourteen team term which led to Souths' exclusion from the 2000 NRL competition. 301 In my view there are no valid discretionary reasons for refusing injunctive relief in the present case. Sections 45(2) and 4D(1) operate to prohibit competitors (News and ARL) from entering into an agreement, arrangement or understanding for the purpose, inter alia, of preventing the supply or acquisition of services to or from a particular class of persons. While the exclusionary provision in the present case may be unexceptionable if it were imposed by a sole competition organiser, it is a per se contravention of the Act in the event that two competing organisers agree to impose it in pursuit of their exclusionary purpose. That purpose is critical to the conclusions I have reached. Thus, in the usual course, an injunction would be granted to restrain the repetition of a per se contravention of Pt IV of the Act. 302 I do not accept the argument that an injunction should be refused as it would, in effect, prohibit a "legitimate commercial endeavour" by the NRL partners to establish, in the public interest, any viable and sustainable national competition with an agreed limitation on the number of competing teams. It is suggested that a sixteen team competition, the imposition of the "Basic Criteria", or any other limitations on entry, would likewise constitute exclusionary provisions and that the Court ought not make an order that would have the effect of causing a different breach to the one complained of. As explained above, in my view the sixteen team competition proposed by ARL probably did not have an exclusionary purpose. The "Basic Criteria" intended to be, and in fact, used by the NRL partners to determine the clubs that were able to compete in their top level rugby league competition also probably did not have an exclusionary purpose. That is because those provisions do not target for exclusion any particular persons or class of persons and, to the extent there might be any exclusionary purpose, it is not a substantial purpose. Rather, and unlike the fourteen team term, such provisions appear to be intended, inter alia, to include all of the top level rugby league clubs or entities that were likely to be eligible, and ready, willing and able, to participate in the 2000 NRL competition. Even if such provisions had an exclusionary effect it does not follow that they had an exclusionary purpose. In any event, the injunction that I regard as appropriate in the present case does not have the effect of mandating any conduct that would result in a different breach of the Act. 303 I also do not accept that injunctive relief should be refused on public policy grounds. Implicit in that contention is the suggestion that the fourteen team term would satisfy the public benefit test under the Act and therefore would be authorised. The short answer to the contention is that whether the provision can satisfy the test is not self evident and, in any event, that is a matter that is required to be determined in accordance with the procedures laid down in the Act. In that regard I note that in the February 1998 MoU the NRL partners agreed that they "will (if necessary) inform, and make a joint submission to, the ACCC (about the Merger)". Plainly, the parties were aware that the merger of their respective competitions raised issues under Pt IV of the Act but they proceeded with the merger without seeking any authorisation for it. In my view it is inconsistent with the policy of the Act for the Court to refuse injunctive relief in respect of conduct that contravenes the Act on the ground that the parties might satisfy the public benefit test, particularly where those parties have wilfully abstained from seeking an authorisation for their conduct. Further, while it may be accepted that there is a public benefit in a unified competition it does not follow that such a competition could only be viable or sustainable if it were limited to fourteen teams. That was not the ARL's view when it sought a sixteen team limitation. 304 Damages is not an adequate remedy. The raison d'ętre of Souths is to compete in the top level rugby league competition, rather than to reap an award of damages for being wrongfully excluded from competing in that competition. 305 Finally, I do not consider that there is any substance in the claims of the NRL partners of delay and harm to third parties. Souths has not delayed but rather has acted reasonably in only bringing its claim when it was excluded from the 2000 NRL competition. Further, as the relief I would grant does not mandate any particular conduct I do not accept that that relief will result in undue harm to any innocent third parties. 306 Souths is also entitled, under s 82 of the Act, to damages to be assessed in respect of any loss and damage suffered by it by the conduct of News, NLRI, ARL and NRL that contravened s 45(2) of the Act. Accordingly, the assessment of damages should be remitted to the trial judge. 307 Souths has succeeded on its appeal. I would order that the main respondents to the appeal, News, NLRI, ARL and NRL pay Souths' costs of the appeal. Souths failed on its misleading and deceptive conduct and contract causes of action at trial. Some allowance in respect of the costs of that failure may be appropriate as those causes of action were not pursued on the appeal. In all the circumstances the determination of the costs of the proceedings below should be remitted to the trial judge. I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.

Associate: Dated: 6 July 2001 Counsel for the Applicant: Mr D F Jackson QC with Mr R W White SC, Ms A Silink

Solicitor for the Applicant: Nicholas G Pappas & Company

Counsel for the First and Second Respondents: Mr N C Hutley SC with Ms S J Goddard

Solicitor for the First and Second Respondents: Allens Arthur Robinson

Counsel for the Third Respondent: Mr D Campbell with Mr S Hughes

Solicitor for the Third Respondent: Colin W Love & Co

Counsel for the Fourth Respondent: Mr A J Meagher SC with Mr J E Marshall

Solicitor for the Fourth Respondent: Minter Ellison

Counsel for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Mr A Coleman

Solicitor for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Henry Davis York

Date of Hearing: 7, 8 & 9 May 2001

Date of Judgment: 6 July 2001

THE SCHEDULE CANBERRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 008 568 634)

CANTERBURY-BANKSTOWN RUGBY LEAGUE CLUB LTD (ACN 001 869 405)

CRONULLA-SUTHERLAND DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 692 186)

ST GEORGE ILLAWARRA RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED (ACN 085 008 340)

BRISBANE BRONCOS RUGBY LEAGUE CLUB LIMITED (ACN 010 769 025)

COWBOYS RUGBY LEAGUE FOOTBALL LIMITED (ACN 060 382 961)

MELBOURNE STORM RUGBY LEAGUE CLUB LIMITED (ACN 081 369 468)

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 348 436)

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 009 158)

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 687 416)

PENRITH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 908 583) Sixteenth Respondent

WESTS TIGERS RUGBY LEAGUE FOOTBALL PTY LIMITED (ACN 090 076 403)

AUCKLAND WARRIORS RUGBY LEAGUE LIMITED (Registered in NZ No. 508 646)

BRISBANE BRONCOS CORPORATION PTY LTD (ACN 057 607 208)