ASIC commences Federal Court action against former directors of Tennis Australia

• ASIC also seeks that pecuniary penalties be ordered against Mitchell and Healy

The Australian Securities and Investments Commission (ASIC) has issued civil penalty proceedings in the Federal Court of Australia against former Tennis Australia Limited directors, Harold Mitchell, of Melbourne, and Stephen Healy, of Northbridge, New South Wales.

ASIC’s case relates to a decision made in 2013 by the Tennis Australia board to award the domestic television broadcast rights for the Australian Open tournament to the Seven Network for a 5-year period without a competitive tender process.

See also:
• Nine gets another big summer sport: Paying $300m for Australian Open tennis
• Nine gets tennis, still wants cricket – Seven says tennis deal didn’t add up

ASIC alleges that both Mitchell and Healy:

• withheld material information from the Tennis Australia board when it made its decision to award the domestic broadcast rights
• failed to ensure that the board was fully informed about the value of the rights, the interest of parties other than the Seven Network in acquiring those rights and the best method of marketing them
• failed to advise the board that Tennis Australia was likely to obtain better terms by putting the rights out to competitive tender
• failed to ensure that a sub-committee, that had been appointed by the board to advise it about the granting of the rights, carried out its functions.

In relation to Harold Mitchell alone, ASIC also alleges that he:

• passed on to the Seven Network confidential information about the interest of its competitors in acquiring the rights
• passed on to Seven Network confidential information about the views and negotiating position of Tennis Australia’s management and board about the granting of the rights
• downplayed to the Tennis Australia board the interests of parties other than the Seven Network in acquiring the rights
• failed to inform the Tennis Australia board about the concerns that the Seven Network had over the interest of Network Ten in acquiring the rights, and
• encouraged the Tennis Australia board to conclude an agreement with the Seven Network instead of putting the rights out to competitive tender.

ASIC is seeking declarations that Mitchell contravened sections 180(1), 182(1) and 183(1) of the Act and that Healy contravened section 180(1) of the Act. ASIC also seeks that pecuniary penalties be ordered against Mitchell and Healy and that both be disqualified from managing corporations.

Top Photo: Harold Mitchell

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