Re Austereo Limited v Trade Practices Commission [1993] FCA 233; (1993) Atpr 41-228 (1993) 114 ALR 636 (14 May 1993)

COURT

CATCHWORDS

HEARING

Counsel for Applicant: Mr A.C. Chernov QC with

Mr P.E. Anastassiou

Solicitors for Applicant: Mallesons Stephen Jaques

Counsel for Respondent: Mr C.A. Sweeney QC with

Mr C.M. Scerri

Solicitors for Respondent: Australian Government Solicitor

ORDER

1. The Application be dismissed.

2. The Applicant pay the Respondent's costs.

DECISION

"77. The provisions of this Part have effect notwithstanding the

Trade Practices Act 1974."

3. The  Broadcasting Services Act  is designed to control and regulate what is described in  subsection 5(1)  as the broadcasting industry. The objects of the Act are set out in s3, two only of which need to be referred to for present purposes namely s3(a) and (b):

"3. The objects of this Act are:

(a) to promote the availability to audiences throughout

Australia of a diverse range of radio and television

services offering entertainment, education and information;

and

(b) to provide a regulatory environment that will facilitate the

development of a broadcasting industry in Australia that is

efficient, competitive and responsive to audience needs;"

"4.(1) The Parliament intends that different levels of

regulatory control be applied across the range of broadcasting

services according to the degree of influence that different types

of broadcasting services are able to exert in shaping community

views in Australia."

"158.The primary functions of the ABA are:

(a) ...

(c) to allocate, renew, suspend and cancel licences and to

take other enforcement action under this Act; ... "

"5.(1) In order to achieve the objects of this Act in a way

that is consistent with the regulatory policy referred to in

section 4, the Parliament:

(a) charges the ABA with responsibility for monitoring the

broadcasting industry; and

(b) confers on the ABA a range of functions and powers that are

to be used in a manner that, in the opinion of the ABA,

will:

(i) produce regulatory arrangements that are stable and

predictable; and

(ii) deal effectively with breaches of the rules

established by this Act."

8. As is a fairly common method adopted in statutes which regulate the provision of services or activities, the  Broadcasting Services Act  prohibits the provision of a broadcasting service without a licence. Thus  s133  provides:

"133.A person must not provide a commercial radio broadcasting

service unless the person has a licence to provide that service.

Penalty: $200,000."

10. It is helpful at this stage to refer to the meanings to be given to the two words "person" and "licence" appearing in  s133.  "Licence" is defined in  s6  of the  Broadcasting Services Act  to mean a licence allocated by the ABA under that Act. Paragraph 22(1)(a) of the Acts Interpretation Act 1901, provides that in any Act, unless the contrary intention appears, the word person includes a body politic or corporate as well as an individual.

11.  Part 4  of the  Broadcasting Services Act  is headed "COMMERCIAL TELEVISION BROADCASTING LICENCES AND COMMERCIAL RADIO BROADCASTING LICENCES".  Part 4  comprises  sections 36  to  49  inclusive. As part of its functions, the ABA is required to define licence areas within which a licence may be allocated. This follows from the limited range within which the broadcasting service can be received. The ABA determines the number of licences available to be allocated in each licence area, the number depending upon the number of persons within each licence area. Thus there are a greater number of licences available to be allocated in the capital cities than in country regions. Further, the number varies between capital cities. The  Broadcasting Services Act  provides a complex method by which commercial broadcasting licences are allocated to applicants for those licences. It is not necessary in these reasons to discuss the method of allocation of licences but it is noted that under  s37 , a licence is not to be allocated to an applicant if the applicant is not a company formed in Australia, or in an external Territory, and has a share capital. Thus, a person to whom a licence is allocated must be a corporation and probably a corporation under the Trade Practices Act 1974. It seems reasonably clear that a licence, when granted, is property. It is an asset of the corporation to which it is allocated. Further, it seems reasonably clear that the allocation of a licence would not constitute a contravention of the Trade Practices Act.

12. In their submissions, counsel for the applicant made special reference to  subsection 39(1)  of the  Broadcasting Services Act . The subsection is set out in full:

"39.(1) If:

(a) there is only one commercial radio broadcasting licensee

providing services in a licence area; and

(b) at least 2 other commercial radio broadcasting licences that

are broadcasting services bands licences are available for

allocation in the licence area; and

(c) the licensee requests the ABA, in writing, to allocate

another commercial radio broadcasting licence that is a

broadcasting services bands licence to the licensee;

the ABA must, subject to  s37 , allocate an additional licence to

the applicant."

14. Commercial broadcasting licences are subject to the conditions set out in Parts 3 and 4 of Schedule 2 to the  Broadcasting Services Act , see  s42 , and such other conditions as may be imposed by the ABA, see  sections 43  and  44 . A commercial broadcasting licence remains in force for five years, see  s45 , and may be renewed by the ABA, see  sections 46  and  47 . A licensee may surrender the licence by notice in writing given to the ABA, see  s49.  Under  s48 , a licensee "may transfer the licence to another person." On its face, the transfer could be to a natural person, but in the context of  Part 4  of the  Broadcasting Services Act , there may be a contrary intention so that "person" would be construed as meaning a company which comes within  s37.  It seems reasonably clear that the transfer of the licence to a corporation could be capable of constituting a contravention of s50 of the Trade Practices Act which, for present purposes, provides that a corporation (or person) must not directly or indirectly acquire shares in the capital of a body corporate or acquire any assets of a person (or corporation) if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

15. Reference can now be made to the crucial statutory provisions of the  Broadcasting Services Act  relevant to the matter before the Court. Part 5 of the Act is headed "CONTROL OF COMMERCIAL BROADCASTING LICENCES." It will be remembered that these licences include commercial television broadcasting licences as well as commercial radio broadcasting licences. The provisions of Part 5, which comprises sections 50 to 78 inclusive, contain sections which apply to the control of licensees of commercial broadcasting licences and the control of licences themselves. In this proceeding, the issue involves the control of licences, not the control of licensees, hence the reference to the provisions of Part 5 will be limited. The  Broadcasting Services Act  contains no definitive meaning of the word "control" when used in that Act. An inclusive meaning is given in s6 as follows:

"6.(1) In this Act, unless the contrary intention appears:

...

"control" includes control as a result of, or by means of, trusts,

agreements, arrangements, understandings and practices, whether or

not having legal or equitable force and whether or not based on

legal or equitable rights;"

"7. Schedule 1 sets out mechanisms that are to be used in:

(a) deciding whether a person is in a position to exercise

control of a licence, a company or a newspaper for the

purposes of this Act; and

(b) tracing company interests of persons."

17. The two crucial sections of the  Broadcasting Services Act  relied upon by counsel for the applicant are  sections 54  and  77 .  Section 54  is to be read in conjunction with  s53.   Sections 53  and  54  together constitute Division 2 of Part 5 of the Act. Division 2 is headed "LIMITATION ON CONTROL". The sections are set out in full, although in the present case, s54 is the relevant section.

"53.(1) A person must not be in a position to exercise control

of commercial television broadcasting licences whose combined

licence area populations exceed 75% of the population of

Australia.

(2) A person must not be in a position to exercise control of

more than one commercial television broadcasting licence in the

same licence area.

54. A person must not be in a position to exercise control of

more than 2 commercial radio broadcasting licences in the same

licence area."

19. Section 77 was set out at the beginning of these reasons. That section is within Division 11 of Part 5. That division is headed "MISCELLANEOUS". For ease of comparison s77 is set out again:

"77. The provisions of this Part have effect notwithstanding the

Trade Practices Act 1974."

21. Division 7 of  Part 5  contains provisions relating to approval of temporary breaches of the  Broadcasting Services Act  relating to control of licences. Division 8 of  Part 5 , comprising  sections 70 ,  71  and  72 , is headed "ACTION BY THE ABA". In essence, Division 8 provides that if the ABA is satisfied that a person is in breach of, among other provisions, s54 of the Act, the ABA may by notice given to the person, or if the person is not the licensee and the breach is one that can be remedied by the licensee, the licensee, direct the person or the licensee to take action so that the person is no longer in breach of that provision. The time to be allowed for this to be done varies according to the provisions contained in the Division. A person who fails to comply with such a notice is guilty of a criminal offence. It follows that a contravention of s54 can form the basis for the committing of a criminal offence.

22. The facts giving rise to this proceeding are not in dispute and can be stated shortly. The applicant is the licensee of six commercial radio broadcasting licences issued under the Broadcasting Act 1942 but which, for present purposes, can be treated as licences under the  Broadcasting Services Act . The six licences are within five different licence areas. The licences are with respect to the following commercial radio broadcasting services:

2 DAY FM Sydney

FOX FM Melbourne

B105 FM Brisbane

SA FMAdelaide

FM 104 Canberra

2CA Canberra

2MMM Sydney

3MMM Melbourne

4MMM Brisbane

96FM Perth

25. In March 1993 the applicant informed the respondent of its proposal to acquire the licences from FM Australia Ltd. The applicant was mindful of the fact that the respondent might consider that its proposed acquisition was subject to the provisions of the Trade Practices Act and that the respondent might desire to investigate the acquisition. After a meeting and several telephone discussions had taken place between the applicant and the respondent, the respondent advised the applicant that in its view the Trade Practices Act did apply to the proposed acquisition and that the respondent intended to commence investigations for the purpose of deciding whether the proposed acquisition infringed s50 of the Trade Practices Act.

26. When FM Australia Ltd was notified of the decision of the respondent, it declined to continue dealings with the applicant. The applicant then commenced those proceedings under s163A of the Trade Practices Act seeking a declaration which, in its amended form, is as follows:

"A Declaration that pursuant to sub-section 163A1(a) of the Trade

Practices Act 1974 an acquisition of control of a commercial radio

broadcasting licence where such acquisition is not prohibited by

 Section 54  of the  Broadcasting Services Act 1992  does not

contravene  Sections 45(2)(a)(ii) ,  45 (2)(b)(ii) or  50  of the Trade

Practices Act 1974."

28. There is no doubt that a serious question has arisen as to the meaning and operation of the Trade Practices Act on the facts before the Court. There is a real dispute between the parties on this issue. In these circumstances the Court should exercise the jurisdiction conferred upon it by s163A; see Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 36 FLR 134 and especially per Deane J at 156-7.

29. The essence of the contentions made by counsel for the applicant was that the proposed acquisition by the applicant of the licences from FM Australia Ltd was being made within the permissive framework of  s54  of the  Broadcasting Services Act  and that even if the acquisition could substantially lessen competition in a market within the meaning of s50 of the Trade Practices Act,  s77  of the  Broadcasting Services Act  operates to oust what otherwise would have been the operation of s50 of the Trade Practices Act in respect of that acquisition. It was possible that control of the licences could be acquired by means of a management or like agreement without there being an acquisition of shares or other assets. In those assumed circumstances s45 of the Trade Practices Act, other than its operation in respect of exclusionary provisions, would be ousted also.

30. The essence of the contentions made by counsel for the respondent was that  s77  of the  Broadcasting Services Act  was expressed to save the operation of the provisions of  Part 5  of that Act notwithstanding the Trade Practices Act. The primary intention of s77, so it was said, was not to abrogate the operation of the Trade Practices Act nor to render its provisions inapplicable to conduct to which  Part 5  of the  Broadcasting Services Act  attaches but merely to ensure that the provisions of  Part 5  are not rendered ineffective by the Trade Practices Act. Section 77 did not apply to permit conduct proscribed by the Trade Practices Act. The section applied only in the event that one or more of the provisions of Part 5 could have no effect if the provisions of the Trade Practices Act were to apply to them. Thus, so it was said, s77 had the effect of rendering the Trade Practices Act provisions inapplicable to that limited extent. It is difficult to identify any such provision even though counsel referred to s67 and s73. In any event those sections applied notwithstanding the Trade Practices Act.

31. The form of declaration as sought by the applicant in its amended form was submitted to the Court after the completion of the hearing. As originally framed, one of the declarations sought related to Part IV of the Trade Practices Act, but no express mention was made to s45. In a written submission, counsel for the respondent have opposed the making of the declaration in its amended form and have relied upon a number of contentions set out in that submission. It is proposed to defer consideration of that submission and to consider the application on the basis of whether s50 of the Trade Practices Act is excluded from having any application by reason of  s77  of the  Broadcasting Services Act .

32. Sections 45 and 50 of the Trade Practices Act are within Part IV of that Act. Part IV is headed "RESTRICTIVE TRADE PRACTICES". The provisions of Part IV have general application. Section 51 contains a number of provisions which exclude the operation of the provisions of Part IV. Thus, under sub-section 51(3) specified conduct which could be in contravention of the provisions of Part IV is excluded if that conduct is within the provisions of the intellectual property legislation. Sub-section 51(1) provides that the provisions of Part IV do not apply to conduct specifically authorized or approved by an Act. Sections 236, 237 and 238 of the Telecommunications Act 1989 are illustrations of such an Act. Counsel for the respondent contended that if a similar exclusion was intended by  s77  of the  Broadcasting Services Act , it would be expected that the provision would have been included in s51 of the Trade Practices Act or in an express form similar to that contained in the Telecommunications Act. The fact that an object of the legislature can be achieved in one way does not deny that the same object can be achieved by another.

33. An essential step in the contention of counsel for the applicant was that  s54  of the  Broadcasting Services Act  conferred a right as well as imposing a prohibition. Putting it another way, it was said that the prohibition expressed by  s54  gave rise to an implied permission to enable one person lawfully to be in a position to exercise control of one or two commercial radio broadcasting licences in the same licence area. In those circumstances, it was contended that under  s77  the implied permission must have effect to allow that to be done notwithstanding the Trade Practices Act.

34. In my opinion there is no basis for an implication of permission arising from the express prohibition contained in  s54  of the  Broadcasting Services Act . That Act contains detailed provisions relating to the allocation of commercial broadcasting licences. The method of allocation is set out in Part 4. Section 77 does not apply to Part 4. Provisions in Part 4 relate to the suitability of applicants for licences. Licences can be transferred or surrendered. The  Broadcasting Services Act , apart from the prohibition contained in  s54 , is not concerned with regulating the method by which a licensee exercises its powers to control its commercial radio broadcasting licence. That is left to the discretion of the licensee. Details of the person who is in a position to control the licence must be given to the ABA. Failure to do this constitutes a criminal offence. Contravention of  s54  can form the basis for the committing of a criminal offence. All these matters are at the discretion of the licensee who is able to decide who is to be in a position to exercise the control of its licence and how to determine who is in that position. The Act does provide, by means of s7 and Schedule 1, a mechanism by which to decide whether a person is in a position to exercise control of a commercial broadcasting licence. That mechanism is directed to determining whether, among other things, a person is engaging in conduct in contravention of s54. There is no room in the wording of s54 for the introduction of a principle of implied permission similar in nature to the doctrine of implied immunities which has been rejected with respect to the Australian Constitution.

35. Section 54 imposes a prohibition only. It follows, in my opinion, that there is nothing in s54 upon which s77 can operate.

36. This conclusion is supported by the fact that s77 is limited to the provisions of  Part 5  of the  Broadcasting Services Act  and cannot apply with respect to the other Parts of that Act, particularly those Parts which provide for the allocation and transfer of licences. Section 54, which is within Part 5, is directed to persons who are in a position to exercise control of more than two commercial radio broadcasting licences in the same licence area. In my opinion, a licensee of a commercial radio broadcasting licence must be a company within the meaning of s37, irrespective of whether that company was the applicant to whom the licence was allocated or became the licensee by way of transfer under s48. There is much to be said for the view that s54 is directed to natural persons or individuals but that issue need not be decided in this application. If the provisions of the Trade Practices Act do not apply to the allocation of commercial radio broadcasting licences but apply to the transfer of those licences, it is difficult see the logic of excluding the application of the Trade Practices Act with respect to control of licences where, prima facie, the licensee is the person, within the extended meaning of that word, who is in a position to control the licences. As has been said, control comes from the actions of the licensee. Whether the provisions of Part IV of the Trade Practices Act apply to those actions could raise difficult and complex issues of fact and of law.

37. The conclusion is supported further by the provisions of  Part 7  of the  Broadcasting Services Act . This Part was inserted into that Act with effect from 11 December 1992, some 14 months after the  Broadcasting Services Act  came into operation. Nevertheless, the provisions in  Part 7  are relevant in considering the construction of  s77. 

38.  Part 7  is contained in the Broadcasting Services (Subscription Television Broadcasting) Amendment Act 1992, Act 171 of 1992. It extends control and regulation to what is commonly referred to as pay TV. It contains provisions for the allocation of licences for what is called a subscription television broadcasting service. Part 7 imposes further obligations on an applicant for a pay TV licence. Under s97, before such a licence is allotted, the ABA is required to request the Trade Practices Commission to provide a report stating whether in its opinion the allocation of the licence would constitute a breach of s50 of the Trade Practices Act if the allocation of the licence were the acquisition of an asset by a body corporate and would not be authorized under s88 if the applicant had applied for such an authorization. This section appears to be based upon the view that under the  Broadcasting Services Act  the allocation of a licence would not constitute a contravention of the Trade Practices Act. I expressed this view earlier in these reasons without any reliance upon the provisions of Part 7 of the  Broadcasting Services Act . Having regard to the view expressed earlier in these reasons, with respect to s51 of the Trade Practices Act it is interesting to note s116B, which is within  Part 7  of the  Broadcasting Services Act , is as follows:

"116B. Nothing in this Part is to be taken as specifically

authorizing any Act or thing for the purposes of sub-section 51(1)

of the Trade Practices Act 1974."

40. Having come to this conclusion, it is not necessary to consider the submission made on behalf of the respondent relating to the form of declaration made.

41. The application is dismissed with costs.