CONCLUSION ON FOXTEL'S CHALLENGE TO THE DECLARATION ON ADMINISTRATIVE LAW GROUNDS
111 As has been noted, his Honour rejected this challenge, holding that FOXTEL had not demonstrated that the ACCC had misconstrued Part XIC, or taken into account irrelevant considerations, or failed to take into account relevant considerations. FOXTEL now appeals from these conclusions.
112 In order to put the appeal into its statutory context, the relevant provisions of Part XIC should be recalled.
· The object of the Part is to promote the LTIE (s 152AB(1)).
· In determining whether a particular thing (i.e. the Declaration) promotes the LTIE, regard must be had (by the ACCC) to the extent to which the Declaration is likely to result in the achievement (relevantly) of the following objectives: (i) promoting competition in markets for listed services; and (ii) encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure (s 152AB(2)).
· For the purposes of (i) above, regard must be had to the extent to which the Declaration will remove obstacles to end-users (s 152AB(4)).
· For the purposes of (ii), above, regard must be had to (a) technical feasibility; (b) the legitimate commercial interests of the suppliers; and (c) the incentives for investment in the infrastructure (s 152AB(6)).
· The ACCC may declare a service if satisfied that its making will promote the LTIE (s 152AL(3)(d)).
113 Much of the contents of the ACCC's Report has already been mentioned. However, for our immediate purposes, it will be necessary for us to refer again to some aspects of the Report as follows.
114 As has been seen, in its Report, the ACCC specifically addressed the issue of the promotion of competition, and concluded that declaration would be likely to do this because of high entry barriers; and because niche TV service providers, e.g. TARBS, could offer a range of programming alternative to those offered by FOXTEL and Optus which often offer the same niche channels.
115 In its final conclusions, the ACCC considered that, absent declaration, it was unlikely that viable entry to the retail pay TV market in areas already cabled would be possible for new providers. The ACCC also referred to barriers to entry, including the unavailability of premium programming, and the cost and limitations of alternative means of carrying the services. The ACCC considered these to be "significant" barriers. In addition, the Report noted the vertical integration between the retail pay TV service providers and the providers of the cable carriage service. This, the ACCC said, provided an incentive for the latter to restrict access to their cables. The ACCC considered that, absent declaration, it was likely that a narrower range of programming would be available, and at high prices.
116 The ACCC also specifically addressed the issue of the encouragement of efficiency, including economically efficient investment in infrastructure. The ACCC concluded that it was "technically feasible" to supply, and charge for, the declared services. With respect to economically efficient investment in infrastructure, the ACCC discussed the legitimate commercial interests of the access providers, including the ability to exploit economies of scale and scope, and their interest in earning a normal commercial return on investment. The ACCC concluded that declaration was unlikely to affect these interests detrimentally. The Report went on to discuss incentives for investment in the infrastructure. The ACCC said that it would have been concerned if declaration had the consequence that Telstra or Optus decided not to expand their networks; but the ACCC was of the view that this was not a likely outcome of declaration. The Report proceeded to discuss the impact of declaration upon incentives for investment in other infrastructure, concluding that declaration was likely to encourage efficient investment here. The ACCC considered that declaration would facilitate market entry and enable service providers to obtain information about demand characteristics and the likely responses of competitors, thus reducing the risks associated with infrastructure deployment, and thereby enabling service providers to make efficient decisions about when to deploy additional infrastructure.
117 In the ultimate statement of its conclusions, the ACCC said.
"The fundamental argument [against] declaration … is that regulatory intervention should only address clear market failure, and that no such failure is evident in any of the markets relevant to this inquiry. Telstra, Foxtel and Cable & Wireless Optus argue that the necessary conditions for the exercise of market power do not exist in these markets. In particular, they argue that there is no 'bottleneck' in the market for carriage of subscription television services, and that without such a bottleneck, there is no basis for the Commission finding that declaration would be in the long term interests of end users. Further, they argue that prices being charged are close to or below cost, so that no monopoly pricing is involved.
The Commission notes that there is competition between the major providers of retail subscription television services over cable. Nonetheless, the Commission considers that the structure of the markets is such that regulatory intervention is necessary. Each of the carriage providers has an incentive to restrict access to the infrastructure it controls, because of the vertical links between the carriage and retail pay television services. Subscription television services provided by access seekers over the cable infrastructure would compete with the retail services provided by the owners of infrastructure, or by companies in which the owner has a major shareholding. Submitters have described the difficulties they have faced in negotiating access to the cable infrastructure.
Because of their vertical integration with the retail pay television services, the carriage provides can restrict access to their cable infrastructure without serious penalties in terms of loss of wholesale business. In these circumstances, programming services that might otherwise compete successfully with existing retail pay television services or channels cannot do so effectively. The Commission considers competition in the retail pay television market would be promoted if such programming services were given the opportunity to be provided to customers. Therefore the key issue is not merely one of whether existing pay television charges are excessive, but whether there is sufficient choice of programming."
118 The Report went on:
"The [ACCC] notes the submissions that draw attention to the costs to access providers and seekers that may accrue from declaration. Where such costs do arise, the [ACCC] notes that access seekers have shown a preparedness to meet the reasonable costs to cable owners of providing the service.
The [ACCC] would be concerned if declaration of the analogue service inhibited the deployment of infrastructure to deliver broadband services, including pay television. However, the [ACCC] notes that the declaration of a similar service in July 1997 had no noticeable effect on the existing or proposed roll out of services. In addition, the regulatory framework provides for exemptions from the standard access obligations where this will promote the long term interests of end users."
119 The Report concluded with the statement that, in the ACCC's view, declaration would promote the LTIE.
120 In support of its appeal, FOXTEL first challenges the rejection by Wilcox J of opinion evidence sought to be tendered by FOXTEL from an economic expert, Dr P L Williams. In his affidavit, sworn on 2 February 2000, Dr Williams referred to a report he had prepared on the Declaration, and said that, in summary, his opinion was that the approach, analysis and tests adopted by the ACCC in making the Declaration "were not the approach, analysis and tests which an economist would have adopted in making that decision". In his report, Dr Williams stated that "[his] aim is not to examine the merits of the ACCC's conclusions [but] [r]ather to examine whether the ACCC adopted a sound economic approach and concluded the tests an economist would employ in reaching its view".
121 As Wilcox J noted, in his report Dr Williams expressed an opinion on several matters, in particular market definition, which appeared to depart from the approach taken by the ACCC in those areas.
122 The primary Judge ruled that Dr Williams' opinion evidence was inadmissible as irrelevant, essentially for the reason that, by virtue of the terms of the applicable statutory provisions, "it was for ACCC (not a hypothetical economist) to determine what steps it needed to undertake in order to consider those matters and achieve satisfaction".
123 So far as Dr Williams' opinion on market definition was concerned, in the absence of a claim of Wednesbury perversity (and that claim was not advanced before us), Wilcox J ruled that "it was for the ACCC to determine the facts pertinent to its exercise of statutory power". Nor, in his Honour's opinion, was market definition itself an issue in this proceedings because it was not an operative part of the ACCC process of reasoning.
124 We are not persuaded that his Honour erred in principle in declining to accept this evidence as not relevant to an issue in a claim for judicial review such as this. This is not to deny that, in other statutory contexts, expert economic opinion evidence may be admissible as capable of illuminating the issues for decision. Clearly, in some cases, it can especially if the meaning of a technical term is involved. But here the essential question for his Honour, as was explicitly recognised in his reasons, was whether the ACCC had erred in law (not fact) in addressing the statutory issue, namely, whether the ACCC is satisfied that declaration will promote the LTIE, as there defined. It is true that this definition picks up several concepts, for instance the notion of competition, which are complex. But none of them has any special technical meaning or trade usage that requires explication by an expert economist.
125 In our opinion, the question whether the views of Dr Williams on these matters would assist the Court in determining whether the ACCC committed an error of law in performing its statutory function, was essentially a matter for his Honour's assessment at the hearing. Wilcox J had to make an assessment, during the proceeding, whether FOXTEL had demonstrated the nexus necessary to establish the adjectival relevance of the material tendered. As the trial Judge, his Honour's views are entitled to respect, particularly in this area. Moreover, we are now concerned with the question at the level of substantive relevance - a more difficult threshold for FOXTEL to pass; and there still remains the question whether rejection of the evidence had any material consequence in terms of his Honour's overall approach.
126 We are not persuaded that his Honour erred in ruling that the opinions of Dr Williams would not assist in the determination of the legal issues before his Honour. Again, it should be emphasised that his Honour was not attempting a review on the merits. If he had been, the input of Dr Williams would, no doubt, have assisted that very different process.
127 FOXTEL further argues that his Honour should not have rejected the evidence of Mr T Mockridge, its Chief Executive Officer, in his affidavit sworn on 1 February 2000, expressing an opinion on the future profitability of a foreign or other "niche" channels. Again, whilst it may be possible to envisage other situations where evidence of this kind could clarify an issue, his Honour, as the trial Judge, thought otherwise. We are not persuaded that we should interfere with that assessment. Similar comments may be made of his Honour's rejection of evidence sought to be tendered from Mr Cowley.
128 Turning now to FOXTEL's wider challenges, it is submitted that the ACCC misconstrued and failed properly to apply ss 152AB and 152AL. The submission was developed by an elaborate argument. In essence, it was said that the ACCC's analysis of the relevant market was flawed, with the consequence that the ACCC's determination of the critical question, whether competition was likely to be promoted by declaration was also flawed, since it was said, irrelevant considerations were taken into account on the one hand, and relevant considerations ignored on the other. Specifically, it was contended that the ACCC's perception of the significance of niche programming was flawed.
129 In developing the argument, counsel for FOXTEL contended for a specific market definition, comprehensively challenging the views expressed by the ACCC in this area, but emphasised some particular aspects, for instance, the product dimension, substitutability of pay TV services and free-to-air TV, the geographic dimension, the time dimension, and the "bottleneck" analysis.
130 As noted, FOXTEL's argument laid particular emphasis on the ACCC's approach to niche programming. It was said that the ACCC's analysis failed to give consideration to the following: the existing state of competition; the size of the markets for niche programming; the niche programming presently offered by existing operators; other niche programming that might be available; the revenues that might be generated from niche programming; and the ability of potential access seekers to be viable in the long term. It is submitted that, in this regard, the ACCC "failed to consider critically relevant matters".
131 We do not accept the submission that these were "relevant matters" for judicial review purposes. As Black CJ, Sackville and Emmett JJ said in Price v Elder [2000] FCA 133 (at par 13):
"Failure to take into account a relevant consideration can only be made out as a ground of review of an administrative decision if the decision maker fails to take into account a consideration that he or she is bound to take into account in making that decision. What factors a decision maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the relevant factors are not expressly stated in the statute, they must be determined by implication from the subject matter, scope and purpose of the Act. Where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statutes some implied limitation on the factors to which the decision maker may legitimately have regard. Where a discretion is unconfined by the terms of the statute, a court will not find that the decision maker is bound to take particular matter into account unless an implication that he or she is bound to do so is to be fund in the subject matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39 -40."
132 And, as Gleeson CJ and McHugh J have explained (Foster v Minister for Customs & Excise (2000) HCA 38 at paras 22 - 23); (2000) 13 Leg Rep 23 at 27):
"In Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Brennan J said:
'The Court has no jurisdiction to visit the exercise of a statutory power with invalidity for failure to have regard to a particular matter unless some statute expressly or by implication requires the repository of the power to have regard to that matter or to matters of that kind as a condition of exercising the power.'
The level of particularity with which a matter is identified for the purpose of applying this principle may be significant. A related question arises where the failure complained of is not a complete failure to address a certain subject, but a failure to make some inquiry about facts said to be relevant to that subject. The argument in this Court does not assert lack of procedural fairness, or unreasonableness to the degree that may constitute a ground for treating a decision as invalid."
133 In the present case, no claim is made (at least before us) of a lack of procedural fairness, or of "unreasonableness" to the point of perversity.
134 What does the language of the statute tell us about the matters which the ACCC is bound to take into account in declaring? In our view, when regard is had to the relevant provisions of Part XIC it appears that the matters said by FOXTEL to be relevant are not to be found, expressly or by implication, in the statutory scheme at all. Rather, the operation of that scheme depends upon quite different concepts. This is made clear by the express language of the legislation, and there appears to be no room whatsoever for any implication, in the statutory scheme, of the different notions advocated on behalf of FOXTEL. This is not to say that some reference could not legitimately be made to some of the FOXTEL concepts in the course of a process of reasoning in performance of the ACCC's statutory function here. But it does not at all follow that the ACCC was bound to take that notion into account for present purposes.
135 The matter may be tested this way. Inter alia, the statute requires the ACCC to have regard to the extent to which declaration "is likely to result in the achievement of … the objective of promoting competition in markets for listed services …". On behalf of FOXTEL it is submitted, particularly in the context of niche programming, that the ACCC was, as noted above, bound to take into account the size of the markets for niche programming and the existing state of competition in that market; and that, when assessing this particular state of competition, it was "necessary" that the ACCC make an assessment of, inter alia, the nature and extent of that market.
136 We cannot accept the argument which, in our opinion, seeks impermissibly to substitute a different statutory scheme. There was no obligation imposed on the ACCC under this legislation to make any specific finding on any particular market or sub-market. Rather, the statutory function was expressed in the more general language of the extent of the achievement of the objective stated in s 152AB(2)(c). Although this provision mentions "market", the central idea there expressed is the achievement of the objective of the promotion of competition in this area. This is a far more generalised notion than the specific issue of market definition. Clearly, "competition" and "market" are related concepts, and, as has been said, it can be expected that in performing its function here, the ACCC would, and did, refer to the market, but in a general way. In our view, the ACCC's approach accorded with the provisions of the statutory scheme. Put differently, there was nothing in the legislation which bound the ACCC to make the specific findings on market definition, especially in connection with niche programming, contended for by FOXTEL.
137 In short, in our opinion, this aspect of FOXTEL's challenge is, in truth, an impermissible attempt to obtain judicial review by an attack of the ACCC's process of reasoning on the facts or the merits (see Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Minister for Immigration & Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 629, 651 - 656, 659 and 669). As noted, his Honour the primary Judge rejected FOXTEL's argument for essentially the same reasons. We agree with his Honour's approach. Similarly, we would reject FOXTEL's claim that the ACCC took into account irrelevant considerations. For a consideration to be irrelevant in this sense the statute must expressly or impliedly prohibit consideration of it - Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 40; Reg. v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49 - 50. On the contrary, as his Honour held, and as the structure and language of the Report indicated, the ACCC had regard to the matters prescribed by Part XIC and to no other matters. Its judgment, in terms of its "satisfaction" or process of reasoning, is not itself amenable to judicial review, unless a claim of a perverse decision is advanced, and that is no longer pursued (cf. Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 579).
138 Ground 8 of FOXTEL's notice of appeal is as follows:
"8. His Honour the trial judge erred in not deciding that there was no evidence or other material to justify the making of the decision, within the meaning of and for the purposes of sections 5(1)(h) and 5(3)(a) and/or 5(3)(b) of the Administrative Decisions (Judicial Review) Act 1977, in relation to:
(a) the finding that the principal advantage of declaration is likely to be increased competition by niche service providers in those households which are already subscribers to an existing service.
(b) The finding that competition will be promoted to a noticeable extent by the 1999 Declaration."
139 This ground was debated at some length before us. There may be more than one answer to it. For our purposes, however, it is sufficient to mention one. As was submitted on behalf of the ACCC, and we agree, this ground identifies conclusions that are not factual matters at all, but rather are matters of value judgment.
140 Finally, it was submitted for FOXTEL that the ACCC erred in applying the "with and without [declaration]" test. However, the test is not required by the statute. Rather, it was no more than an analytical tool employed by the ACCC in the course of its process of reasoning. In our view, this yardstick was not applied, as FOXTEL suggested, in any inconsistent way. Rather, as has been seen, in applying it, the ACCC had to acknowledge the existence of the doubts expressed about the validity of the Deeming Statement. Even if some inconsistency had crept in, this would not, of itself, make the decision amenable to judicial review (Waterford v Commonwealth (1987) 163 CLR 54 at 77; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 357; Minister for Immigration & Multicultural Affairs v Eshetu (above) at 626 - 627; Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411 at 421).
141 In our view, the administrative challenges to the Declaration were correctly rejected by Wilcox J, essentially for the reasons his Honour gave.
142 The 1999 Declaration is therefore valid.