Application by Telstra Corporation Limited - [2009] ACompT 1

AUSTRALIAN COMPETITION TRIBUNAL
Application by Telstra Corporation Limited [2009] ACompT 1
RE:APPLICATION FOR REVIEW OF A DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION UNDER SECTION 152AT OF THE TRADE PRACTICES ACT 1974 TO REFUSE TO GRANT AN EXEMPTION ORDER TO TELSTRA CORPORATION IN RESPECT OF THE SINGTEL OPTUS HFC NETWORK

BY: TELSTRA CORPORATION LIMITED
ABN 33 051 775 556
Applicants
File No 7 of 2008
JUSTICE MIDDLETON (DEPUTY PRESIDENT), MR R DAVEY AND PROFESSOR D ROUND
22 MAY 2009
MELBOURNE (HEARD IN SYDNEY)

IN THE AUSTRALIAN COMPETITION TRIBUNAL

File No 7 of 2008

RE: APPLICATION FOR REVIEW OF A DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION UNDER SECTION 152AT OF THE TRADE PRACTICES ACT 1974 TO REFUSE TO GRANT AN EXEMPTION ORDER TO TELSTRA CORPORATION IN RESPECT OF THE SINGTEL OPTUS HFC NETWORK

BY:
TELSTRA CORPORATION LIMITED
ABN 33 051 775 556

Applicants

THE TRIBUNAL:

JUSTICE MIDDLETON (DEPUTY PRESIDENT),
MR R DAVEY and PROFESSOR D ROUND

DATE OF DECISION:

22 MAY 2009

WHERE MADE:

MELBOURNE (HEARD IN SYDNEY)

THE TRIBUNAL DECIDES THAT:
1.The decision of the Australian Competition and Consumer Commission of 11 November 2008 is affirmed.

IN THE AUSTRALIAN COMPETITION TRIBUNAL

File No 7 of 2008

RE: APPLICATION FOR REVIEW OF A DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION UNDER SECTION 152AT OF THE TRADE PRACTICES ACT 1974 TO REFUSE TO GRANT AN EXEMPTION ORDER TO TELSTRA CORPORATION IN RESPECT OF THE SINGTEL OPTUS HFC NETWORK

BY:
TELSTRA CORPORATION LIMITED
ABN 33 051 775 556

Applicants

THE TRIBUNAL:

JUSTICE MIDDLETON (DEPUTY PRESIDENT),
MR R DAVEY and PROFESSOR D ROUND

DATE OF DECISION:

22 MAY 2009

WHERE MADE:

MELBOURNE (HEARD IN SYDNEY)

CONTENTS
INTRODUCTION
AN OVERVIEW OF THE AUSTRALIAN TELECOMMUNICATIONS MARKET
Telstra’s position in the market
Optus’ position in the market
The place of the Part IXC telecommunications access regime in the market
The purpose of section 152AT in the market
OPTUS’ HFC NETWORK
THE RELEVANT SERVICES AND OPTUS’ USE OF THEM
The unconditioned local loop service (ULLS)
The line sharing service (LSS)
The local carriage service (LCS)
The wholesale line rental service (WLR)
The domestic public switched telephone network originating access service (PSTN OA)
Trends in Optus’ use of the Relevant Services
THE GRAVAMEN OF TELSTRA’S APPLICATION
RELEVANT MARKETS
THE LONG-TERM INTEREST OF END-USERS
WHETHER THE EXEMPTION IS LIKELY TO PROMOTE COMPETITION
Number of premises passed by Optus’ HFC Network
Number of premises served by Optus’ HFC Network
The likely effect on third-tier firms
The likely effect on end-users
Competition v a competitor: the targeted and discriminatory nature of the application for exemption
Regulating technology v regulating services
WHETHER THE EXEMPTION IS LIKELY TO ENCOURAGE ECONOMIC EFFIENCY
The notion of economic efficiency
Whether Optus is likely to upgrade its network
The ‘chilling’ or disincentive effect
Limitation or conditions
CONCLUSION
DECISION
REASONS FOR DECISION
INTRODUCTION

By application dated 17 December 2007 (‘the Application’), Telstra Corporation Limited (‘Telstra’) applied to the Australian Competition and Consumer Commission (‘the ACCC’) under s 152AT(1) of the Trade Practices Act 1974 (Cth)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Application by Telstra Corporation Limited

Details

AGLC: Application by Telstra Corporation Limited [2009] ACompT 1
Case: [2009] ACompT 1
Decision Date: 22 MAY 2009

CaseChat Overview and Summary

The Australian Competition Tribunal reviewed an application by Telstra Corporation Limited seeking exemption from certain standard access obligations in relation to services supplied to SingTel Optus Pty Ltd and its related entities. The Tribunal considered whether granting the exemption would promote the long-term interests of end-users by encouraging competition and efficient investment in infrastructure. The Tribunal examined whether the exemption would likely lead to Optus upgrading its HFC network and connecting more premises, and whether it would promote competition or restrict investment. The Tribunal found that the exemption would not likely promote competition as it would disadvantage Optus, Telstra's main competitor, and restrict Optus to using only its HFC network. The exemption would also likely have a chilling effect on investment, creating a disincentive for firms to invest in infrastructure for fear of losing access rights. The Tribunal concluded that the exemption was not likely to promote the long-term interests of end-users and affirmed the decision of the Australian Competition and Consumer Commission to refuse the exemption.

The Tribunal's decision focused on whether the exemption would likely achieve the objectives of promoting competition and encouraging efficient investment. While the exemption may have had some benefits for Telstra, it would likely restrict competition by disadvantaging Optus and creating a chilling effect on investment. The Tribunal found that the exemption was not likely to promote the long-term interests of end-users as required by the Trade Practices Act. The decision affirms the importance of a technology-neutral approach to regulation and the need to balance competition and investment objectives.

Orders