Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd

Desktop Marketing Systems Pty Ltd (DMS) brought proceedings against Telstra Corporation Ltd (Telstra) in the Federal Court of Australia. The dispute concerned Telstra's alleged contravention of section 46 of the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)), which prohibits misuse of market power. DMS alleged that Telstra had engaged in anti-competitive conduct by leveraging its dominant position in the market for the supply of telecommunications services to disadvantage DMS, a competitor in the market for directory services.

The primary legal issue before the Full Federal Court was whether Telstra had taken advantage of its substantial degree of market power in the telecommunications market for the purpose of eliminating or substantially damaging a competitor in the directory services market. This required the court to consider the relationship between Telstra's conduct in the telecommunications market and its alleged anti-competitive purpose in the directory services market, and whether the former was used to achieve the latter.

The court analysed the concept of "taking advantage of" market power under section 46. It held that for a contravention to be established, the conduct in the dominant market must be causative of the anti-competitive effect in the other market. The court found that Telstra's conduct in the telecommunications market, while demonstrating substantial market power, did not demonstrate that this power was used for the purpose of damaging DMS in the directory services market. The court distinguished between the existence of market power and the use of that power for an anti-competitive purpose, concluding that the evidence did not establish the latter.

The appeal was dismissed, with the Full Federal Court affirming the primary judge's finding that Telstra had not contravened section 46 of the Trade Practices Act 1974 (Cth).