Mr Richard Chadwick General Manager Adjudication Branch Australian Competition and Consumer Commission C/o - Level 7 Angel Place 123 Pitt Street (between Hunter Street and Martin Place) Sydney NS W 2000

4 March 2009

I . j DOC: I;- ----------I

Dear Mr Chadwick

Notification of Exclusive Dealing - Sydney Opera House Trust

We act for the Sydney Opera House Trust (the "Trust")

We enclose two Notifications of Exclusive Dealing by the Trust pursuant to section 93 (1) of the Trade Practices Act 1974 (the "Act"). The Notifications are lodged in respect of conduct which may constitute third line forcing as defined by sections 47(6) and 47(7) of the Act.

We also enclose two cheques made payable to the Australian Competition and Consumer Commission in the sum of $100 each, being the prescribed lodgement fee for the two Notifications.

1 Notification relating to sponsorship rights

The proposed conduct described in the first Notification will involve the Trust granting a licence for the provision of catering services at the Opera House on the condition that:

the appointed caterer will acquire certain products supplied by suppliers with whom the Trust has entered into a sponsorship agreement ( the "Sponsors") for re-supply at the Opera House;

a specified proportion of the appointed caterer's purchases or sales of particular products, or of products within a particular category, at the Opera House must be supplied by the Sponsors; and/or

the appointed caterer will not supply at the Opera House products or services that compete with those of the Sponsors.

The proposed conduct will not result in any significant public detriments because the exclusivity that the Trust proposes to grant to the Sponsors is of limited scope and effect. Caterers will be

Level 61 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia T +61 2 9296 2000

DX 113 Sydney ABN 22 041 424 954 syd@mallesons.com www.mallesons.com F + 6 1 2 92963999

9819995-1

Australian Competition and Consumer Commission 4 March 2009

free to acquire products from any supplier they choose where the Trust does not have any contrary obligations of exclusivity to its sponsors.

The obligation placed on the caterers may also be qualified so that caterers need only purchase products from a sponsor to the extent that the products are supplied under trading terms and conditions which are competitive with alternative products andlor that such products are readily available to the caterer and are leading brands in the field.

Additionally, the Trust has found that most caterers usually choose a single provider for most of their products. Therefore, the proposed conduct will not lead to any increase in prices for food and beverage to persons attending the Opera House, and is not likely to result in any significant loss of consumer choice.

The proposed conduct will result in public benefits, including:

the public benefits generated from the Trust's management and maintenance of the Opera House, which is made possible in part through the support of its sponsors. This in turn depends largely on the exclusivity afforded to that sponsor's products; and

maximising the value of sponsorship arrangements, which reduces the cost to Australian taxpayers of maintaining the Opera House and reduces the cost at which the Australian public can enjoy the benefits offered by the Opera House; and

the provision of high standards of quality, service and value in the provision of catering services at the Opera House.

The Trust notes that exclusive sponsorship arrangements are common for major sporting, cultural and other entertainment events. Additionally, the Trust is continually subject to the control and direction of the Minister for the Arts, which will ensure that the proposed conduct is, and will continue to be, consistent with the public interest.

Therefore, the Trust respectfully submits that the proposed conduct described in the first Notification will give rise to a net benefit to the Australian public.

2 Notification relating to the supply of catering services

The proposed conduct described in the second Notification will involve the Trust granting to persons ("Clients") the right to exclusively use parts of the Opera House for specified functions on the condition that, if food and beverage products and/or catering and related services ("Catering Services") are required, Clients will acquire the Catering Services from specified authorised operators.

The proposed conduct will not result in any significant public detriments. The proposed conduct will also not result in a substantial lessening of competition in the relevant markets because the relevant markets are all characterised by the availability of many suppliers of substitutable services and intense competition.

Page 2

Australian Competition and Consumer Commission 4 March 2009

The proposed conduct will result in public benefits, including:

the public benefits generated from the Trust's management and maintenance of the Opera House, which is hnded partly from hiring venues and granting rights to caterers; and

ensuring compliance with the physical limitations of the Opera House, which allow only a limited number of caterers; and

ensuring compliance with the security requirements of the Opera House, which necessitate a limited number of caterers.

The Trust is continually subject to the control and direction of the Minister for the Arts, which will ensure that the conduct is, and will continue to be, consistent with the public interest.

Therefore, the Trust respectfully submits that the proposed conduct described in the second Notification will give rise to a net benefit to the Australian public.

Please contact me should you require any further information about the proposed conduct described in the attached Notifications.

Thank you for your assistance.

A u r s t ! sincerely /w Sharon Henrick

( partner ' ~ i r e c t line +61 2 9296 2086

Mobile +61 (0) 438 32 37 65 Direct fax +61 2 9296 3999 Email sharon.henrick@mallesons.com

Page 3

Form G .-=-----

Commonwealth of Australia Trade Practices Act 1974 - subsection 93(1)

NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with subsection 93 (1) of the Trade Practices Act 1974, of particulars of conduct or of proposed conduct of a kind referred to in subsections 47 (2), (3), (4), (9, (6), (7), (8) or (9) of the Competition Code of New South Wales in which the person giving notice engages or proposes to engage.

PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM

1 Applicant

(a) Name of person giving notice: (Refer to direction 2)

Sydney Opera House Trust (ABN 69 712 101 035) (the "Trust") ~ 9 3 7 9 (o

(b) Short description of business carried on by that person: (Refer to direction 3)

The Trust

The Trust is a body corporate constituted under the Sydney Opera House Trust Act (NSW) 1961. It operates and maintains the Sydney Opera House (the "Opera ~ o u s e " ' ) for the Government of New South Wales. The Trust has 10 members appointed by the Governor on the nomination of the Minister for the Arts.

Under s4(1) of the Act, the Trust has the following objects:

the administration, care, control, management and maintenance of the building and site;

the management and administration of the Opera House as an arts centre and meeting place;

the promotion of artistic taste and achievement in any branch of the musical, operatic, dramatic, terpsichorean, visual or auditory arts; and

scientific research into and the encouragement of new and improved forms of entertainment and methods of presentations.

Arrangements with food and beverage operators at the Opera House

Under s4(3) and Schedule l(e) of the Sydney Opera House Trust Act, the Trust is entitled to "grant rights and privileges to . . . caterers.. . and other vendors to sell

1 "Opera House", for the purposes of this notification, has the meaning it has under the Act. It means the whole of the land comprised in Lot 4, Deposited Plan 787933, and Lot 5, Deposited Plan 775888, and includes any building, work or fixture on that land.

their wares at the Opera House upon such terms and conditions and subject to the payment of such charges as may be determined by the Trusty'. Alternatively, the Trust may also carry on such business itself (Schedule l(c) of the Act).

On the basis of these provisions, the Trust has chosen to contract out all food and beverage services. A number of private operators provide these services throughout the Opera House site, including in its restaurants and cafis, in its foyers and in the function areas, as well as in certain outdoor areas.

Each food and beverage operator enters into a confidential services agreement with the Trust. The confidential agreement usually specifies:

the specific nature and scope of the services to be provided;

a space at the Opera House in which the operator has the exclusive right to provide food and beverage services; and/or

a space or spaces at the Opera House for shared use by the operator and others.

Exclusive spaces with only one designated operator include, for example, the Sidewalk Caf6 & Bar and its service area and the Opera Point Marquee.

Shared spaces include, for example, the theatre foyers where, depending on the range of products required, one of three possible operators could be permitted to provide food and beverage services.

Funding of the Opera House and sponsorship arrangements

In addition to receiving from the New South Wales Government an annual endowment, the Trust generates income for the Opera House primarily from the following:

ticket sales;

venue rentals;

guided tours;

outsourced food and beverage; and

corporate sponsorship (cash and in-kind).

The Trust is authorised to conclude sponsorship agreements under s4(3) and Schedule 1 (i) of the Sydney Opera House Trust Act. Pursuant to these provisions, the Trust may "enter into any contract or arrangement with any person for the purpose of promoting the objects of the Trust".

In 2008, the Trust's sponsorship arrangements made up approximately 4% of the Trust's income2. Of this, a significant portion is derived from food and beverage related sponsorships (currently including, for example, Nest16 ice creams,

2 See Sydney Opera House Annual Report 2007-08, page 47. By comparison, the endowment received from the State Government accounted for a further 26% of the Trust's income.

Hungerford Hill wines, and Lavazza coffee). Please note that the precise terms and conditions of the Trust's sponsorship arrangements are confidential.

(c) Address in Australia for service of documents on that person:

Sharon Louise Henrick Partner Mallesons Stephen Jaques Level 61 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000

Telephone: 02 9296 2294 Fax: 0292963999

Notified arrangement

(a) Description of the goods or services in relation to the supply or acquisition of ' which this notice relates:

(i) supplying or offering to supply the opportunity and granting a licence for the provision at the Opera House of catering services on certain conditions; and

(ii) supplying or offering to supply sponsorship rights.

(b) Description of the conduct or proposed conduct:

The Trust proposes to supply the opportunity and grant a licence for the provision at the Opera House of catering services on the condition that:

the appointed caterer will acquire certain products supplied by appointed suppliers for re-supply at the Opera House (the appointed suppliers being suppliers with whom the Trust has entered into a sponsorship agreement); and/or

a specified proportion of the appointed caterer's purchases or sales of particular products, or of products within a particular category, at the Opera House must be supplied by appointed suppliers (the appointed suppliers being suppliers with whom the Trust has entered into a sponsorship agreement); and/or

the appointed caterer will not supply at the Opera House products or services that compete with those of the Trust's appointed suppliers (the appointed suppliers being suppliers with whom the Trust has entered into a sponsorship agreement).

Further, the Trust may refuse to supply the opportunity or grant a licence for the provision at the Opera House for the reason that the prospective caterer will not agree to any or all of the foregoing conditions.

(Refer to direction 4)

3 Persons, or classes of persons, affected or likely to be affected by the notified conduct

(a) Class or classes of persons to which the conduct relates: (Refer to direction 5)

(i) persons appointed by the Trust to provide catering services at the Opera House from time to time; and

(ii) sponsors nominated by the Trust from time to time.

(b) Number of those persons:

(i) At present time:

5 caterers

3 sponsors

(ii) Estimated within the next year: (Refer to direction 6)

5 caterers

approximately 3 sponsors

(c) Where number of persons stated in item 3 (b) (i) is less than 50, their names and addresses:

(i) Suppliers of catering services:

Food Passions Pty Ltd, Mappi Pty Ltd and Sea Headland Pty Ltd collectively t/a Opera Point Events C/- Lower Concourse, Sydney Opera House, Bennelong Point Sydney NSW 2000

Dolce Vita Australia Pty Ltd CI- Sydney Opera House, Bennelong Point Sydney NSW 2000

Fongamanni Pty Ltd 10 Wade St, Maroubra NSW 2035

Guillaume at Bennelong Pty Ltd The Judge's House, 53 1 Kent Street, Sydney NSW 2000

Food Passions Pty Ltd and Sea Headland Pty Ltd collectively t/a Opera Bar C1 - Solotel Pty Ltd, IS' Floor, 338 Oxford Street, Paddington NSW 2021

(ii) Sponsors:

Nestle Australia Ltd t/a Nestle Ice Creams 1 Homebush Bay Drive Rhodes NSW 2138

Hungerford Hill Wines Pty Ltd Suite 56a Jones Bay Wharf 19-2 1 Pirrama Road Pyrmont NSW 2009

Valcorp Fine Foods Pty Ltd t/a Lavazza Coffee Unit 1 23 1 Princes Hwy St Peters NSW 2044

4 Public benefit claims

(a) Arguments in support of notification: (Refer to direction 7)

Conduct gives rise to net public benefits

There is a public benefit in the Trust's management of the Opera House as a performance venue and meeting place. Similarly, there is a public benefit in the Trust continuing to maintain the Opera House building as one of the most significant icons of the city of Sydney and of Australia as a whole.

The performance by the Trust of those functions is made possible in part through the support of sponsors. The degree of support provided by each sponsor depends to a large degree upon the exclusivity afforded to that sponsor's products.

In furtherance of its statutory obligations, the Trust wishes to retain the option of allowing sponsorship for the Opera House. Such sponsorship reduces the cost burden on the taxpayer and on patrons of the Opera House.

A commonly required condition of sponsorship is to allow the sponsor to use the sponsorship to promote the supplier's goods and services.

In more detail:

There are public benefits in the Trust's activities

Pursuant to s4(1) of the Sydney Opera House Trust Act, the Trust has the following objectives:

the administration, care and maintenance of the Opera House building and site;

the management of the Opera House as an arts centre and meeting place;

the promotion of artistic taste and achievement; and

research into the encouragement of new forms of entertainment and methods of presentations.

The achievement by the Trust of these objectives generates significant public benefits.

Sponsorship reduces the cost to Australian taxpayers of maintaining the Opera House

As stated above, the Trust recovers a significant part of the costs of operating and maintaining the Opera House through sponsorship arrangements. In 2008, revenue from sponsorship made up approximately 4% of the Trust's income.

As this figure shows, sponsorship is vital to the existence of the Trust and its ability to achieve its statutory objectives.

The proposed arrangements are, in turn, essential to the Trust's ability to derive revenue from sponsorships.

Generally, large organisations are only willing to make substantial financial contributions to the Trust through a sponsorship arrangement if the Trust can grant the organisations exclusive rights to promote their products at the Opera House at certain times during the term of the sponsorship arrangement.

In most cases, the greater the prominence of a sponsor's products at the Opera House and the more publicity achieved, the greater value that sponsor will place on obtaining sponsorship rights.

In order to maximise the value of sponsorship arrangements to both sponsors and the Trust, it is essential for the Trust to be able to guarantee to the sponsors that their products will be used exclusively or at least be featured prominently at relevant product outlets in the Opera House at certain times during the term of the sponsorship arrangement.

The revenue that the Trust receives from sponsorships arrangements goes directly towards the costs of maintaining and operating the Opera House, thereby leading to a lower cost to the Australian public.

Any part of its hnding that the Trust cannot generate through sponsorship will result in one or all of the following:

reduced performances;

increased ticket prices; or

increased government hnding3.

In all of those instances, it would be the Australian public who suffered.

The proposed sponsorship arrangements, therefore, reduce the cost at which the Australian public can enjoy the many benefits offered by the Opera House. That is a substantial benefit to the public.

3 Under s20 of the Act, the Trust is entitled to an annual endowment from the New South Wales Government to assist the Trust in carrying out its objects.

Quality and value control

The proposed conduct will further benefit the public by providing high standards of quality and service in the provision of a broad range of catering services at the Opera House.

The Trust enters into sponsorship agreements only with sponsors whose corporate image, brands and products are consistent with the image of the Opera House as an Australian icon.

The proposed arrangements, therefore, will assist the Trust to ensure that:

the food and beverages served at the Opera House to the public, to attendees at corporate sponsor functions, to artists and performers, officials and employees of the Opera House are of a particular quality and represent good value; and

there is a consistent standard and availability of food and beverage products at the relevant outlets of the Opera House and at all relevant events.

This will benefit the public.

Exclusive sponsorship arrangements are common

The Trust notes that exclusive sponsorship arrangements are common for major sporting, cultural and other entertainment events. Major sponsors generally expect exclusivity in return for their sponsorship.

The Trust is aware that arrangements similar to those proposed in this notification have been or continue to be in place, for example, in the context of the Rugby World Cup 2003, with the Queensland Rugby Union, at the Perth Zoo, and the Queensland Performing Arts Centre.

In all of these cases, the arrangements serve to generate significant public benefits by reducing the cost at which members of the public can enjoy the cultural, sporting, or other events.

Supervision by the Minister

Pursuant to s3(1) of the Sydney Opera House Trust Act, the Trust is continually subject to the control and direction of the Minister for the Arts.

The involvement of the Government of New South Wales will ensure that the conduct is, and will continue to be, consistent with the public interest.

(b) Facts and evidence relied upon in support of these claims:

In support of the above claims, the Trust wishes to rely on its submissions under 1 (b) and 4(a) above.

5 Market definition

Provide a description of the market(s) in which the goods or services described at 2 (a) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions): (Refer to direction 8)

The relevant markets in this case are:

(i) markets for the provision of catering services; and

(ii) sponsorship markets.

6 Public detriments

(a) Detriments to the public resulting or likely to result from the notification, in particular the likely effect of the notified conduct on the prices of the goods or services described at 2 (a) above and the prices of goods or services in other affected markets: (Refer to direction 9)

The Trust considers that the likely public benefits from the conduct, as outlined above, will outweigh any possible public detriment and that the conduct will not result in a substantial lessening of competition in relation to the relevant market.

In particular:

Limited scope and effect of exclusivity

The exclusivity that the Trust proposes to grant to its sponsors and make a condition of its agreements with caterers will only be of limited scope and will only have a very limited effect because:

caterers will be free to source such products from any supplier they choose for those occasions where the Trust does not have any contrary obligations of exclusivity to its sponsors;

the obligation placed upon the caterers may be qualified such that the caterer need only purchase products from a sponsor to the extent that the products are supplied under trading terms and conditions which are competitive with alternative products andlor that such products are readily available to the caterer and are leading brands in the field. These qualifications significantly reduce any anticompetitive detriment; and

based on its experience, the Trust has found that most caterers usually choose a single provider for most (and sometimes all) of their products (for example for carbonated soft drinks). It is likely, therefore, that the notified conduct will not have an appreciable effect on consumer choice.

For the above reasons, the proposed conduct will not lead to any increase in prices for food and beverage to persons attending the Opera House, nor are they likely to result in any significant loss of consumer choice.

The Trust's objective in implementing the proposed arrangements will be to ensure that the public can acquire good value food and beverage products at all events at all times.

Limited detriment outweighed by public benefits

To the extent that, on some occasions, patrons of the Opera House will not have the right to choose between competing products, it is submitted that this detriment will be clearly outweighed by the public benefits detailed above.

(b) Facts and evidence relevant to these detriments:

See above.

7 Further information

(a) Name, postal address and contact telephone details of the person authorised to provide additional information in relation to this notification:

Sharon Louise Henrick Partner Mallesons Stephen Jaques Level 61 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000

Telephone: 02 9296 2294 Fax: 0292963999

a t e h 2009

Si 8 d bylon behalf of the applicant ,--.-- - - . ~- --

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~ha$on Louise Henrick t ,

-b-" - Mallesons Stephen Jaques

Partner

DIRECTIONS

1. In lodging this form, applicants must include all information, including supporting evidence that they wish the Commission to take into account in assessing their notification.

Where there is insufficient space on this form to furnish the required information, the information is to be shown on separate sheets, numbered consecutively and signed by or on behalf of the applicant.

2. If the notice is given by or on behalf of a corporation, the name of the corporation is to be inserted in item 1 (a), not the name of the person signing the notice, and the notice is to be signed by a person authorised by the corporation to do so.

3. Describe that part of the business of the person giving the notice in the course of the which the conduct is engaged in.

4. If particulars of a condition or of a reason of the type referred to in section 47 of the Trade Practices Act 1974 have been reduced in whole or in part to writing, a copy of the writing is to be provided with the notice.

5 . Describe the business or consumers likely to be affected by the conduct.

6. State an estimate of the highest number of persons with whom the entity giving the notice is likely to deal in the course of engaging in the conduct at any time during the next year.

7. Provide details of those public benefits claimed to result or to be likely to result from the proposed conduct including quantification of those benefits where possible.

8. Provide details of the market(s) likely to be affected by the notified conduct, in particular having regard to goods or services that may be substitutes for the good or service that is the subject matter of the notification.

9. Provide details of the detriments to the public which may result from the proposed conduct including quantification of those detriments where possible.