Telstra Corporation Ltd v Australian Competition Tribunal - [2009] FCAFC 23

FEDERAL COURT OF AUSTRALIA
Telstra Corporation Limited v Australian Competition Tribunal [2009] FCAFC 23
ADMINISTRATIVE LAW – judicial review of decision of the Australian Competition Tribunal – true construction of Part XIC of the Trade Practices Act 1974 (Cth) – errors of law and jurisdictional error committed by the Tribunal when reviewing a decision of the Australian Competition and Consumer Commission to grant exemptions in favour of the applicant from the requirement to afford access to declared telecommunications services – decision of the Tribunal set aside and remitted to the Tribunal for further consideration and determination according to law.
TRADE PRACTICES – statutory interpretation – Part XIC of the Trade Practices Act 1974 (Cth) – telecommunications access regime and exemption from access obligations – interpretation of ss 152AB, 152AT and 152ATA – decision-maker obliged to consider all three objectives set out in s 152AB(2)(c) to (e) in determining whether a particular thing will promote the long-term interests of end-users of listed services – the long-term interests of end-users of listed services is the sole object of Part XIC – upon the true construction of s 152AT(4), the only matter calling for consideration is whether the decision-maker is satisfied that the making of the exemption order will promote the long term-interests of end-users of listed services – no residual discretion afforded to the relevant decision-maker under s 152AT(4) – objective set out in s 152AB(2)(c), being the objective of promoting competition in markets for listed services, does not authorise as a mandatory matter the imposition of an evidentiary test which requires the tender of empirical evidence as to the present state of competition in the relevant markets – the promotion of competition in s 152AB(c) is to be assessed by having regard to traditional concepts – decision-maker, when considering an application for exemption under s 152AT, obliged to consider whether the imposition of conditions or limitations pursuant to s 152AT(5) enable it to be satisfied that the exemption will promote the long-term interests of end-users of listed services – the Tribunal has no power to review decisions made by the ACCC pursuant to ss 152AL, 152AS and 152ASA.
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5 and 16
Federal Court of Australia Act 1976 (Cth) s 32
Judiciary Act 1903 (Cth) s 39B
Telecommunications Act 1997 (Cth) s 56
Trade Practices Act 1974 (Cth) Part IV, Part XIB (Division 2) and Part XIC; ss 2, 152AB, 152AC, 152AH, 152AL, 152 ALA, 152AR, 152AS, 152ASA, 152AT, 152ATA, 152AU, 152AV, 152AW, 152AY, 152BB, 152BBAA, 152BBC, 151BU and 163A

Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 cited
Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 applied
Linett v McIntyre (2002) 117 FCR 189 applied
Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 applied
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 cited
NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2005) 219 ALR 27 applied
Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 applied
Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169 applied
Re Review of Declaration of Freight Handling Services at Sydney International Airport (2000) ATPR 41-754 cited
Re Seven Network Ltd (No 2) (2004) 187 FLR 373 applied
Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 distinguished
Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124 distinguished
Telstra Corp Ltd v ACCC [2008] FCA 1758 applied

TELSTRA CORPORATION LIMITED (ACN 051 775 556) v AUSTRALIAN COMPETITION TRIBUNAL, CHIME COMMUNICATIONS PTY LIMITED (ACN 073 119 285), AAPT LIMITED (ACN 052 082 416), AGILE PTY LTD (ACN 080 855 321), MACQUARIE TELECOM PTY LIMITED (ACN 082 930 916), POWERTEL LIMITED (ACN 001 760 103), PRIMUS TELECOMMUNICATIONS PTY LIMITED (ACN 071 191 396) and AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
NSD 30 of 2009
JACOBSON, LANDER AND FOSTER JJ
11 MARCH 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 30 of 2009

BETWEEN:
TELSTRA CORPORATION LIMITED (ACN 051 775 556)
Applicant

AND:
AUSTRALIAN COMPETITION TRIBUNAL
First Respondent

CHIME COMMUNICATIONS PTY LIMITED
(ACN 073 119 285)
Second Respondent

AAPT LIMITED (ACN 052 082 416)
Third Respondent

AGILE PTY LTD (ACN 080 855 321)
Fourth Respondent

MACQUARIE TELECOM PTY LIMITED (ACN 082 930 916)
Fifth Respondent

POWERTEL LIMITED (ACN 001 760 103)
Sixth Respondent

PRIMUS TELECOMMUNICATIONS PTY LIMITED
(ACN 071 191 396)
Seventh Respondent

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Eighth Respondent

JUDGES:

JACOBSON, LANDER AND FOSTER JJ

DATE OF ORDER:

11 MARCH 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Pursuant to ss 5 and 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B(1A)(c) of the Judiciary Act 1903 (Cth):
(a)the decision of the Australian Competition Tribunal made on 22 December 2008 in the matter of Applications under s 152AV of the Trade Practices Act 1974 (Cth) by Telstra Corporation Limited (Tribunal File No 2 of 2008) be set aside; and
(b)those applications be remitted to the Tribunal for further consideration and determination according to law.

2.The second to seventh respondents pay the applicant’s costs of and incidental to the application.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 30 of 2009

BETWEEN:
TELSTRA CORPORATION LIMITED (ACN 051 775 556)
Applicant

AND:
AUSTRALIAN COMPETITION TRIBUNAL
First Respondent

CHIME COMMUNICATIONS PTY LIMITED
(ACN 073 119 285)
Second Respondent

AAPT LIMITED (ACN 052 082 416)
Third Respondent

AGILE PTY LTD (ACN 080 855 321)
Fourth Respondent

MACQUARIE TELECOM PTY LIMITED (ACN 082 930 916)
Fifth Respondent

POWERTEL LIMITED (ACN 001 760 103)
Sixth Respondent

PRIMUS TELECOMMUNICATIONS PTY LIMITED
(ACN 071 191 396)
Seventh Respondent

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Eighth Respondent

JUDGES:

JACOBSON, LANDER AND FOSTER JJ

DATE:

11 MARCH 2009

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THIS APPLICATION

This is an application by Telstra Corporation Limited (Telstra) for judicial review of a decision given by the first respondent, the Australian Competition Tribunal (the Tribunal) on 22 December 2008 setting aside the eighth respondent’s decision made on or about 22 August 2008 to grant Telstra orders exempting it from its obligations under s 152AR of the Trade Practices Act 1974 (Cth) (TPA). Although the Tribunal did not formally so order, it may be assumed that the Tribunal refused Telstra’s application for an order exempting Telstra from its obligations under s 152AR.
These applications are said to be made under:
s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act), s 39B(1A)(c) of the Judiciary Act 1903 (Cth), s 163A of the Trade Practices Act 1974 (Cth) (TPA), s 32 of the Federal Court of Australia Act 1976 (Cth) and the Court’s accrued jurisdiction to review.
It is not clear that s 163A of the TPA or s 32 of the Federal Court Act authorise this application or that the Court’s accrued jurisdiction is invoked. However, the Court does have jurisdiction to hear the application under s 5 of the ADJR Act and s 39B of the Judiciary Act.
Telstra seeks orders:
(a)declaring the Decision to be invalid;
(b)setting aside, or quashing, the Decision;
(c)referring the matter to the first respondent for further consideration according to law.
THE PARTIES
Telstra and the second to seventh respondents are all providers of telecommunications services in Australia.
The telecommunications industry is regulated by Parts XIB, XIC and IV of the TPA. The regulator is the eighth respondent, the Australian Competition and Consumer Commission (ACCC).
The Telecommunications Act 1997 (Cth) (Telco Act) recognises a carriage service provider to be a person who supplies or proposes to supply a listed carriage service to the public using a network unit owned by one or more carriers or a network unit in relation to which a nominated carrier declaration is in force. A carrier is also recognised in the Telco Act as being the holder of a carrier licence under s 56 of the Telco Act.
OVERVIEW OF THE LEGISLATION
Division 2 of Part XIB of the TPA defines the circumstances in which a carrier or a carriage service provider is said to engage in anti-competitive conduct for the purposes of that Part.
Part XIC provides for a regime for access to telecommunications networks and services whereby the ACCC may declare carriage services and related services to be declared services. Carriers and carriage service providers who provide declared services are required to comply with standard access obligations (SAOs) in relation to those services. The purpose of SAOs is to facilitate the provision of access to declared services by service providers in order that service providers can provide carriage services and/or content services.
Where carriage services and related services are declared to be declared services, the carriers and carriage service providers must agree with access seekers on the terms and conditions on which the carriers and carriage service providers are required to comply with the SAOs. If agreement cannot be reached between the parties, but the carrier or carriage service provider has given an access undertaking, the terms and conditions are as set out in the access undertaking. If neither an agreement can be reached nor an undertaking given, the terms and conditions are determined by the ACCC which acts for that purpose as an arbitrator.
The Detail of the Legislation
The object of the Part is provided for in s 152AB. Section 152AB(1) identifies the single object for which the Part is designed:
(1)The object of this Part is to promote the long-term interests of end-users of carriage services or of services provided by means of carriage services.
Whilst the Part is designed for the purpose of achieving that one object, the Act provides for three separate objectives to attain that single object. Section 152AB(2) provides:
(2)For the purposes of this Part, in determining whether a particular thing promotes the long-term interests of end-users of either of the following services (the listed services):
(a)       carriage services;
(b)       services supplied by means of carriage services;
regard must be had to the extent to which the thing is likely to result in the achievement of the following objectives:
(c)       the objective of promoting competition in markets for listed services;
(d)the objective of achieving any-to-any connectivity in relation to carriage services that involve communication between end-users;
(e)the objective of encouraging the economically efficient use of, and the economically efficient investment in:
(i)        the infrastructure by which listed services are supplied; and
(ii) any other infrastructure by which listed services are, or are likely to become, capable of being supplied.
Section 152AB(3) provides:
(3) Subsection (2) is intended to limit the matters to which regard may be had.
It follows therefore that the single object of promoting the long-term interests of end-users of carriage services or of services provided by means of carriage services (LTIE) will be attained by reference to the three objectives in paragraphs (c), (d) and (e) of subsection (2), and by reference to no other objectives: s 152AB(3).
Further subsections in s 152AB give guidance as to how the three objectives in paragraphs (c), (d) and (e) of s 152AB(2) are to be determined:
(4)In determining the extent to which a particular thing is likely to result in the achievement of the objective referred to in paragraph (2)(c), regard must be had to the extent to which the thing will remove obstacles to end-users of listed services gaining access to listed services.
(5)Subsection (4) does not, by implication, limit the matters to which regard may be had.
(6)In determining the extent to which a particular thing is likely to result in the achievement of the objective referred to in paragraph (2)(e), regard must be had to the following matters:
(a)whether it is, or is likely to become, technically feasible for the services to be supplied and charged for, having regard to:
(i)the technology that is in use, available or likely to become available; and
(ii)whether the costs that would be involved in supplying, and charging for, the services are reasonable or likely to become reasonable; and
(iii)the effects, or likely effects, that supplying, and charging for, the services would have on the operation or performance of telecommunications networks;
(b)the legitimate commercial interests of the supplier or suppliers of the services, including the ability of the supplier or suppliers to exploit economies of sale and scope;
(c)the incentives for investment in:
(i) the infrastructure by which the services are supplied; and
(ii)any other infrastructure by which the services are, or are likely to become, capable of being supplied.
(7)Subsection (6) does not, by implication, limit the matters to which regard may be had.
(7A)For the purposes of paragraph 6(c), in determining incentives for investment, regard must be had to the risks involved in making the investment.
(7B)Subsection (7A) does not, by implication, limit the matters to which regard may be had.
(8)For the purposes of this section, the objective of any-to-any connectivity is achieved if, and only if, each end-user who is supplied with a carriage service that involves communication between end-users is able to communicate, by means of that service, with each other end-user who is supplied with the same service or a similar service, whether or not the end-users are connected to the same telecommunications network.
The objective of promoting competition therefore will be determined by reference to the matters in s 152AB(4) and any other relevant matters: s 152AB(5). The objective of encouraging economically efficient use of and investment in infrastructure will be determined by reference to the matters in ss 152AB(6) and 152AB(7A) and by reference to any other relevant matters: s 152AB(7). The objective of achieving any-to-any connectivity will be addressed by reference to the inquiry in s 152AB(8).
As already mentioned, the ACCC is empowered to declare a specified eligible service to be a declared service: s 152AL. Section 152AL(1) defines an “eligible service” as:
(a)a listed carriage service (within the meaning of the Telecommunications Act 1997); or
(b)a service that facilitates the supply of a listed carriage service (within the meaning of that Act);
where the service is supplied, or is capable of being supplied, by a carrier or a carriage service provider (whether to itself or to other persons).
Section 152AL(7) provides for special access undertakings which, if given, cause the services supplied to become declared services. They are not relevant for the purpose of this application.
A declaration under s 152AL must specify an expiry date (s 152ALA(1)) within five years of the declaration (s 152ALA(2)).
There is no power in the Tribunal to review a decision of the ACCC under s 152AL.
Division 3 of Part XIC provides for SAOs. Section 152AR provides for the SAOs which are imposed upon a carrier or carriage service provider who supplies declared services. Section 152AR(2) provides that if a carrier or carriage service provider supplies declared services, the carrier or provider is an access provider and the declared services are active declared services. In those circumstances, an access provider must comply with s 152AR(3) which provides:
(3) An access provider must, if requested to do so by a service provider:
(a)supply an active declared service to the service provider in order that the service provider can provide carriage services and/or content services; and
(b)take all reasonable steps to ensure that the technical and operational quality of the active declared service supplied to the service provider is equivalent to that which the access provider provides to itself; and
(c)take all reasonable steps to ensure that the service provider receives, in relation to the active declared service supplied to the service provider, fault detection, handling and rectification of a technical and operational quality and timing that is equivalent to that which the access provider provides to itself.
There are exceptions in s 152AR(4) to the obligations provided for in s 152AR(3) but they are not important for the purpose of this application. Other obligations are imposed upon the access provider by s 152AR but they are also unimportant for the purpose of this application.
If a carrier or carriage service provider is required to comply with any of the SAOs by force of an order under s 152AL, they must comply with the further obligations imposed by s 152AY which requires them, in the first instance, to reach agreement with the access seeker. The ACCC’s role in negotiations is addressed in s 152BBC. If agreement cannot be reached between the carrier or carriage service provider, they may give an access undertaking and, if such an undertaking has been given, then the carrier or carriage service provider must comply with that access undertaking: s 152AY(2)(b)(i). If there is no agreement or undertaking then, as mentioned before, the ACCC acts as an arbitrator: s 152AY(2)(b)(iii).
A carrier or carriage service provider can apply to the ACCC for an order exempting the carrier or carriage service provider from all or any of the obligations referred to in s 152AR. Such an application is made by an individual carrier or carriage service provider. Relevantly, s 152AT provides:
(1)A carrier or a carriage service provider may apply to the Commission for a written order exempting the carrier or provider from all or any of the obligations referred to in section 152AR.
…
(3)After considering the application, the Commission must:
(a)make a written order exempting the applicant from one or more of the obligations referred to in section 152AR; or
(b)refuse the application.
(4)The Commission must not make an order under paragraph (3)(a) unless the Commission is satisfied that the making of the order will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services.
(5)An order under paragraph (3)(a) may be unconditional or subject to such conditions or limitations as are specified in the order.
…
(7)An order under paragraph (3)(a) may be expressed to come into effect:
(a) immediately after it is made; or
(b) on a later date specified in the order.
(8)An order under paragraph (3)(a) may specify an expiry date for the order. If an order expires, this Part does not prevent the Commission from making a fresh order under paragraph (3)(a) in the same terms as the expired order.
…
(10)If the Commission does not make a decision on an application under subsection (1) within 6 months after receiving the application, the Commission is taken to have made, at the end of that 6-month period, an order under paragraph (3)(a) in accordance with the terms of the application.
…
(12)The Commission may, by written notice given to the applicant, extend or further extend the 6-month period referred to in subsection (10), so long as:
(a)the extension or further extension is for a period of not more than 3 months; and
(b)the notice includes a statement explaining why the Commission has been unable to make a decision on the application within that 6-month period or that 6-month period as previously extended, as the case may be.

If an application is made under s 152AT by an individual carrier or carriage service provider, the ACCC must make an order exempting the applicant from one or more of the obligations in s 152AR or refuse the application: s 152AT(3). However, the ACCC cannot make an order for exemption unless it is satisfied that the making of the order will promote the LTIE: s 152AB(4). It does not need to be satisfied that it is in the LTIE but only that it will promote the LTIE. As previously noted, promoting the LTIE is, of course, the single object of Part XIC: s 152AB(1).
The ACCC is not obliged to grant the carrier’s or carriage service provider’s application. That is not the injunction in s 152AT(3). The obligation imposed upon the ACCC is either to make an order exempting the applicant from one or more of the obligations in s 152AR or to refuse the application. The form of the order is a matter for the ACCC and the ACCC is not constrained by the terms of the application.
So much is made clear by the wording of s 152AT(3)(a) and by the provisions of s 152AT(4). The ACCC is entitled to impose conditions or limitations on the order. The ACCC would impose conditions or limitations when it is of the opinion that the imposition of those conditions or limitations would mean that the making of the order will promote the LTIE. The purpose of giving the ACCC the power in s 152AT(5) is to provide the ACCC with a tool whereby it can be satisfied that an order under s 152AT(3)(a) will promote the LTIE.
Section 152AH addresses the matters to which regard must be had to determine the reasonableness of a term or condition.
The TPA also provides for anticipatory individual exemptions from SAOs. Section 152ATA relevantly provides:
(1)A person who is, or expects to be, a carrier or a carriage service provider may apply to the Commission for a written order that, in the event that a specified service or proposed service becomes an active declared service, the person is exempt from any or all of the obligations referred to in section 152AR, to the extent to which the obligations relate to the active declared service.
…
(3)After considering the application, the Commission must:
(a)make a written order that, in the event that the service or proposed service becomes an active declared service, the applicant is exempt from one or more of the obligations referred to in section 152AR, to the extent to which the obligations relate to the active declared service; or
(b)refuse the application.
(4)An order under paragraph (3)(a) may be unconditional or subject to such conditions or limitations as are specified in the order.
…
(6)The Commission must not make an order under paragraph (3)(a) unless the Commission is satisfied that the making of the order will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services.
Section 152ATA contemplates that a carrier or a carriage service provider or a person who expects to be a carrier or carriage service provider might apply to the ACCC for an order of the kind referred to in s 152ATA(3)(a) in the event that a specified service or proposed service becomes an active declared service. Again, however, the ACCC cannot make an order unless it is satisfied that the making of the order will promote the LTIE. It is to be noted that s 152ATA is solely concerned with future events. Section 152ATA could be invoked before a person even becomes a carrier or carriage service provider. It can be invoked by a carrier or carriage service provider before the carrier or carriage service provider has any listed carriage service or any service that facilitates the supply of a listed carriage service declared under s 152AL(3). A person who is not a carrier or carriage service provider can apply for an order exempting it from the obligations to provide SAOs under s 152AR(3) before any eligible services, which it is not then supplying, have been the subject of a declaration under s 152AL. If such an application were made in those circumstances, the ACCC would have to consider the application without the benefit of any empirical evidence.
Section 152AU gives the ACCC power to request an applicant under s 152AT(1) or s 152ATA(1) to give the ACCC further information about the application, but does not empower the ACCC to request any further information from any other party.
Section 152AV provides a regime for review by the Tribunal of a decision of the ACCC under s 152AT or s 152ATA. It provides:
(1)A person whose interests are affected by a decision of the Commission under section 152AT or 152ATA may apply in writing to the Tribunal for a review of the decision.
(2)The application must be made within 21 days after the Commission made the decision.
(3)The Tribunal must review the decision.
Section 152AV enables not only the applicant but also a person whose interests are affected by an ACCC decision to apply to the Tribunal for a review of the decision. A person whose interests are affected would include a service provider.
The functions and powers of the Tribunal are provided for in s 152AW which provides:
(1)On a review of a decision of the Commission under section 152AT or 152ATA, the Tribunal may make a decision:
(a)       in any case—affirming the Commission’s decision; or
(b)in the case of a review of a decision of the Commission to make an order under paragraph 152AT(3)(a) or paragraph 152ATA(3)(a)—setting aside or varying the Commission’s decision; or
(c)in the case of a review of a decision of the Commission under section 152AT refusing an application for an order—both:
(i)        setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, making an order under paragraph 152AT(3)(a); or
(d)in the case of a review of a decision of the Commission under section 152ATA refusing an application for an order—both:
(i)        setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, making an order under paragraph 152ATA(3)(a); or
(e)in the case of a review of a decision of the Commission under section 152AT or 152ATA varying an order—setting aside or varying the Commission’s decision; or
(f)in the case of a review of a decision of the Commission under section 152AT or 152ATA refusing to vary an order—both:
(i)        setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, varying the order; or
(g)in the case of a review of a decision of the Commission under section 152AT or 152ATA revoking an order—a decision setting aside the Commission’s decision; or
(h)in the case of a review of a decision of the Commission under section 152AT or 152ATA refusing to revoke an order—both:
(i)        setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, revoking the order;
and, for the purposes of the review, the Tribunal may perform all the functions and exercise all the powers of the Commission.
(2)       A decision by the Tribunal:
(a)       affirming a decision of the Commission; or
(b)       varying a decision of the Commission; or
(c)       setting aside a decision of the Commission; or
(d)       made in substitution for a decision of the Commission;
is taken, for the purposes of this Act (other than section 152AV or this section), to be a decision of the Commission.
(3)For the purposes of a review by the Tribunal, the member of the Tribunal presiding at the review may require the Commission to give such information, make such reports and provide such other assistance to the Tribunal as the member specifies.
(4)       For the purposes of a review, the Tribunal may have regard only to:
(a)any information given, documents produced or evidence given to the Commission in connection with the making of the decision to which the review relates; and
(b)any other information that was referred to in the Commission’s reasons for making the decision to which the review relates.
(5)       If:
(a)a person applies to the Tribunal for a review of a decision of the Commission under section 152AT or 152ATA; and
(b)the Tribunal does not make a decision under subsection (1) of this section on the review within 6 months after receiving the application for review;
the Tribunal is taken to have made, at the end of that 6-month period, whichever of the following decisions is applicable:
(c)in the case of a review of a decision of the Commission to make an order under paragraph 152AT(3)(a) or paragraph 152ATA(3)(a), where the applicant for review is seeking to have the Tribunal set aside the Commission’s decision—a decision setting aside the Commission’s decision;
(d)in the case of a review of a decision of the Commission to make an order under paragraph 152AT(3)(a) or paragraph 152ATA(3)(a), where the applicant for review is seeking to have the Tribunal vary the Commission’s decision—a decision varying the Commission’s decision in accordance with the terms of the application for review;
(e)in the case of a review of a decision of the Commission under section 152AT refusing an application for an order—both:
(i)        a decision setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, a decision to make an order under paragraph 152AT(3)(a) in accordance with the terms of the application;
(f)in the case of a review of a decision of the Commission under section 152ATA refusing an application for an order—both:
(i)        a decision setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, a decision to make an order under paragraph 152ATA(3)(a) in accordance with the terms of the application;
(g)in the case of a review of a decision of the Commission under section 152AT or 152ATA varying an order, where the applicant for review is seeking to have the Tribunal set aside the Commission’s decision—a decision setting aside the Commission’s decision;
(h)in the case of a review of a decision of the Commission under section 152AT or 152ATA varying an order, where the applicant for review is seeking to have the Tribunal vary the Commission’s decision—a decision varying the Commission’s decision in the manner sought by the applicant for review;
(i)in the case of a review of a decision of the Commission under section 152AT or 152ATA refusing to vary an order—both:
(i)        a decision setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, a decision to vary the order in accordance with the terms of the application for variation;
(j)in the case of a review of a decision of the Commission under section 152AT or 152ATA revoking an order—a decision setting aside the Commission’s decision;
(k)in the case of a review of a decision of the Commission under section 152AT or 152ATA refusing to revoke an order—both:
(i)        a decision setting aside the Commission’s decision; and
(ii)in substitution for the decision so set aside, a decision to revoke the order.
(6)The Tribunal may, by written notice given to the applicant for review, extend or further extend the 6-month period referred to in subsection (5), so long as:
(a)the extension or further extension is for a period of not more than 3 months; and
(b)the notice includes a statement explaining why the Tribunal has been unable to make a decision on the review within that 6-month period or that 6-month period as previously extended, as the case may be.
(7)As soon as practicable after the Tribunal gives a notice under subsection (6), the Tribunal must cause a copy of the notice to be made available on the Internet.
The Tribunal is given all of the functions and may exercise all of the powers of the ACCC which would, of course, include the power to obtain information from the applicant for the order: s 152AU. However, it is constrained by s 152AW(4) to have regard only to the information, documents and evidence given to the ACCC and any other information in the ACCC’s reasons. It has the power to impose conditions and limitations if it is of the opinion that an order should be made under s 152AT(3)(a) or s 152ATA(3)(a).
Section 152AW(5) deems the Tribunal to have made a decision of the kind in the subsection if the Tribunal does not in fact make a decision within six months after receiving the application for review. The Tribunal may extend the time for decision by three months if the Tribunal complies with the statutory injunctions in the subsection.
Part XIC also provides for enforcement of SAOs but these provisions are not important for the present application: s 152BB; s 152BBAA.
The TPA also provides for ordinary class exemptions from SAOs. Section 152AS provides that each member of a specified class of carrier or specified class of carriage service provider can seek an exemption from all of the obligations referred to in s 152AR. Like s 152AT, the ACCC must not make a determination under the section unless it is satisfied that the making of the determination will promote the LTIE. The order exempting may be subject to conditions or limitations: s 152AS(2). Section 152ASA, like s 152ATA, provides for anticipatory exemptions from SAOs but, in the case of s 152ASA, the anticipatory exemption is in relation to members of a specified class of carrier or of a specified class of carriage service provider.
Unlike applications for individual exemptions from SAOs, the TPA does not provide for the review by the Tribunal of orders made under s 152AS or s 152ASA by the ACCC. The only role for the Tribunal in Part XIC is to review a decision of the ACCC made under s 152AT or s 152ATA. As already observed, it does not have any power to review a decision of the ACCC made under s 152AL.
One other section needs to be addressed. Section 151BU empowers the ACCC to make rules for and in relation to requiring specified carriers or carriage service providers to keep and retain records. That section also authorises the ACCC to require those carriers or carriage service providers to prepare reports consisting of information contained in those records and to give those reports to the ACCC. Section 151BU(1) provides that rules under this subsection are to be known as “record-keeping rules” (RKR).
THE DECLARED SERVICES
Two telecommunications services, the local call service (LCS) and the wholesale line rental service (WLR) were declared, pursuant to s 152AL, in July 2006 with effect from 1 August 2006. The effect of the declaration was to require Telstra to supply those services over its copper wire transmission network.
TERMINOLOGY AND TECHNOLOGY
It is necessary to refer to some of the terminology which is used in the industry so as to understand the reasons which follow. We have already noted the meaning of carrier and carriage service provider. An exchange service area (ESA) is a unique singular geographical area defining a customer access network area which is traditionally serviced by a telephone exchange. An end-user is a person who is provided with services by means of carriage services and is typically a business or a residential customer. The LTIE, as already mentioned, is defined by s 152AB of the TPA. A service in operation (SIO) refers to the services provided by a telephone company at any particular time. The term is used in the context of both fixed line services and mobile services.
A digital subscriber line multiplexer (DSLAM) is equipment which is owned by an access seeker and which is typically located in space in an exchange leased by the access seeker from Telstra. A DSLAM is a network device that receives signals from multiple customer digital subscriber line (DSL) connections and aggregates them on a high speed backbone line using multiplexing techniques. Depending on the product, DSLAM multiplexers connect DSL lines with some combination of asynchronous transfer mode, frame relay, or internet protocol networks. A customer connects to the DSLAM through DSL modems or DSL routers which are connected to the Public Switched Telephone Network (PSTN) by ordinary twisted copper pair telephone lines.
POTS or PSTN emulation allows the voice call to be delivered using technology which emulates standard PSTN switching using “soft switches”. PSTN means a telephone network accessible by the public providing switching and transmission facilities using analogue and digital technologies. The voice over internet protocol (VoIP) is a protocol for transmitting voice over packet-switched data networks. It is also sometimes called IP telephony. It enables voice communication to be transmitted by means of the internet protocol with or without a computer and modem.
The expression “migration” means the process of transferring one or several end-users from one service provider to another, or from one service to another (whether it be with the same or different service providers).
There are four separate services which have been declared as declared services under s 152AL.
Line Sharing Service (LSS) (also known as the Spectrum Sharing Service (SSS))
The High Frequency Unconditioned Local Loop Service is the use of the non-voiceband frequency spectrum of unconditioned communications wire (over which wire and underlying voiceband PSTN service is operating) between the boundary of a telecommunications network at an end-user’s premises and a point on a telecommunications network that is a potential point of interconnection located at, or associated with, a customer access module and located on the end-user side of the customer access module.
Upon supply of the LSS, a communications wire is connected to an access seeker’s equipment (such as a DSLAM) so as to enable the access seeker to provide high-bandwidth carriage services (e.g. broadband) using the high frequency (or “non-voiceband”) portion of the frequency spectrum. The LSS is only available in respect of a communications wire where an underlying voiceband PSTN service is operating over the voiceband portion of the frequency spectrum of the communications wire.
When the LSS is supplied to an access seeker:
(a)the communications wire is unconditioned, that is, it need not be, and is not, conditioned by equipment at some point along the communications wire that changes the electrical characteristics of the communications wire to facilitate the carriage of communications;
(b)the access seeker acquiring the LSS must itself provide its own carriage technology (such as a DSLAM) to be used in conjunction with the non-voiceband portion of the frequency spectrum of the communications wire to permit the access seeker to supply high-bandwidth carriage services to end-users; and
(c)the access provider does not carry, and is not responsible for carrying, communications for any service provider on the non-voiceband portion of frequency spectrum of that communications wire.
Local Carriage Service (LCS)
The local carriage service is a service for the carriage of telephone calls from customer equipment at an end-user’s premises to separately located customer equipment of an end-user in the same standard zone.
However, the local carriage service does not include services where the supply originates from an exchange located within a central business district area of Sydney, Melbourne, Brisbane, Adelaide or Perth and terminates within the standard zone which encompasses the originating exchange.
The LCS functions at the re-sale level. While the access seeker provides its own marketing, advertising and billing systems, there is no access seeker equipment required in the provision of the service (although access seekers may seek to provide other elements or services in conjunction with the service). The access provider provides the end-to-end call service between the called and calling party.

Historically, the LCS and WLR have typically been purchased from Telstra by access seekers together with PSTN Originating Access (PSTN OA) and PSTN Terminating Access (PSTN TA).
PSTN Originating Access (PSTN OA)
This is an access service for the carriage of telephone (i.e. PSTN and PSTN equivalent such as voice from Integrated Services Digital Network (ISDN)) calls (i.e. voice and data over the voice band) to a point of interconnect (POI) from end-customers assigned numbers from the geographic number ranges of the Australian Numbering Plan and directly connected to the Access Provider’s network.
The service as described comprises a number of different elements as follows:
·Access via Preselection, AS number ranges such as those numbers listed in POASD7 or 14xy Override code as required to achieve the objective of any-to-any connectivity;
·Call Barring;
·POI Location;
·Forwarding a call beyond the POI of table OASD2 to OASD3 where applicable;
·Signalling;
·CLI provision;
·Provision of Switchports;
·Network Conditioning;
·Fault Handling; and
·Inter C/CSP Billing.
PSTN OA is primarily used by access seekers to enable the provision of national long distance, international and fixed to mobile calls.
Unconditioned Local Loop Service (ULLS)
The unconditioned local loop service is the use of unconditioned communications wire between the boundary of a telecommunications network at an end-user’s premises and a point on a telecommunications network that is a potential point of interconnection located at or associated with a customer on the end-user side of the customer access module.
When the ULLS is supplied to an access seeker:
·the communications wire need not be, and is not, conditioned by equipment at some point along the communications wire that changes the electrical characteristics of the communications wire to facilitate the carriage of communications;
·there is no prescribed bandwidth of supply;
·the access seeker acquiring the ULLS must provide its own carriage technology (such as a DSLAM) with respect to that communications wire to supply carriage services (a standard telephone service and/or broadband with or without VoIP) over the communications wire; and
·the access provider does not carry, and is not responsible for carrying, communications over that communications wire for the access seeker.
Wholesale Line Rental (WLR)
The wholesale line rental service is a line rental telephone service which allows an end-user to connect to a carrier or carriage service provider’s PSTN, and provides the end-user with:
(a)an ability to make and receive any 3.1khz bandwidth calls (subject to any conditions that might apply to particular types of calls), including, but not limited to, local calls, national and international long distance calls; and
(b)a telephone number;
except where the supply of the line rental telephone service is within the central business district area of Sydney, Melbourne, Brisbane, Adelaide and Perth.
The WLR service involves the provision of a basic line rental service that will allow the end-user to connect to the access provider’s PSTN. As with the LCS, access seeker equipment is not involved in the provision of the WLR service, although access seekers may seek to provide other elements or services in conjunction with the service.
Historically, the LCS and WLR have typically been purchased from Telstra by access seekers as a bundle together with PSTN OA and PSTN TA.
TELSTRA’S APPLICATIONS TO THE ACCC
On 9 July 2007, Telstra lodged two applications (the July applications) with the ACCC under s 152AT of the TPA seeking individual exemptions from the SAOs for the LCS and WLR declared services respectively in 371 ESAs in the metropolitan areas of Australia. On 12 October 2007, Telstra lodged two further applications (the October applications) with the ACCC under the same section seeking individual exemptions from the SAOs for the LCS and WLR declared services in respect of a further 16 ESAs in the metropolitan area of Australia. A total of 387 ESAs were the subject of the individual exemption applications from the SAOs for the LCS and WLR declared services.
As mentioned, the LCS and WLR services were declared by the ACCC effective 1 August 2006. The LCS had previously been declared by the ACCC in July 1999. The LCS and WLR declarations had previously been the subject of an application by Telstra for exemption and the declarations do not apply in the central business district areas of Sydney, Melbourne, Adelaide, Brisbane and Perth by reason of an exemption granted for the LCS in July 2002.
On 31 August 2007, the ACCC sought comments from interested persons in relation to the July applications and, in October 2007, the ACCC sought comments from interested parties in respect of the October applications. The ACCC received 14 submissions in response to its invitations.
On 29 April 2008, the ACCC published a draft decision which considered both the July and October applications, and which set out in appendices the exemption orders the ACCC proposed to make on each application as well as a proposed class determination.
In its draft decision, the ACCC proposed to exempt Telstra from the SAOs as they related to the supply of LCS and WLR in 229 ESAs, subject to a number of conditions and limitations. At that time, the ACCC proposed that an exemption order ought to be made in relation to an ESA which had 14,000 or more addressable SIOs within the ESA or four or more ULLS-based competitors (including Telstra) within the ESA.
The ACCC received a number of submissions from nine interested parties. On 13 August 2008, the ACCC released a consultation document on the revised proposed conditions outlining the conditions and limitations that the ACCC proposed to make in its final decision. The ACCC received a further six submissions in relation to those revised proposed conditions.
Telstra contended in its applications to the ACCC that there ought to be orders made for exemption from its obligations to comply with s 152AR(3) and to observe the SAOs in its supply of LCS and WLR in each of the ESAs which were the subject of the applications on the basis that each ESA had, in addition to Telstra, at least one provider of ULLS.
It relied upon the reports of Dr Paterson who is an expert economist with considerable experience in the telecommunications industry. Dr Paterson wrote seven reports over the course of the ACCC’s consideration of Telstra’s applications. In his principal report, he said that there were commercially and technically viable substitutes for LCS and WLR which included ULLS and, to a lesser extent, other fixed access network infrastructure. He said that regulation was inefficient and that exemption would promote the best efficiency in the industry. In particular, he opined that, if regulation were terminated, the resultant competition would stimulate efficient investment.
Dr Paterson proffered the opinion that as a rule of thumb,
the presence of one in-place competitor having access to ULLS at cost-based prices, and having already demonstrated a capacity to serve the market, demonstrates the inevitability of constraint on Telstra’s retail pricing behaviour at least as well as the availability of LCS/WLR.
He gave two reasons for that opinion. First, the existence of the ULLS-based competitors demonstrates that there are no material barriers to entry by ULLS-based operators. Secondly, economic analysis would suggest that the absence of material barriers to entry was consistent with empirical evidence that entry has actually occurred. The existence of competitors would act as a restraint on Telstra’s freedom to price.
Further, Telstra relied upon a report from Professor Cave of the University of Warwick who propounded the hypothesis that
competitors challenge an incumbent by offering services which rely, as their market share rises, less and less on the incumbent’s assets and more and more on their own. Thus, competitors progressively build out their networks closer and closer to their customers.
His hypothesis, which he called “the ladder of investment hypothesis”, put forward the theory that it is desirable to encourage investment by those seeking to enter into a relevant regulated market by progressive acquisition of infrastructure assets. If investment is encouraged, new technology will be introduced into the market and competition will therefore be achieved.
He said that a regulator should give notice that regulation will be progressively withdrawn so that entrants will understand that they need to increase their own infrastructure investment and rely less upon that of the incumbent’s. If they do not invest in infrastructure, they run the risk that, when the incumbent’s services are no longer regulated, those services may not be available to the potential entrant under the same prices and conditions as previously prevailed. He argued that, in a telecommunications market, there are three rungs: the first is entry by way of reselling of the incumbent’s services; the second is the provision of some form of infrastructure to add on to the incumbent’s network; and the third is for the entrant to invest in network facilities of its own.
Professor Cave’s opinion was that the regulator can accelerate the process by indicating that it will withdraw the protection at the various levels of the rungs, which will require entrants to “climb the ladder”.
The regulator, of course, must be aware of the potential for bottlenecks and to be aware of the state of the market in terms of the number of persons in the market, changes in market shares, overall capacity of the market and the LTIE. The regulator must also be aware of developments in technology which will be relevant to the second and third rungs.
THE ACCC’S ORDERS AND REASONS
On or about 22 August 2008, the ACCC made four separate orders under s 152AT(3)(a) in relation to the July applications and in relation to the October applications in respect of LCS and WLR. The four separate orders were included as appendices E, F, G and H to the ACCC’s reasons.
Whilst Telstra had applied for an exemption in respect of 387 ESAs, the orders made by the ACCC exempted only 248 of the 387 ESAs.
The ACCC gave extensive reasons for its decision. Its reasons show that it proceeded in accordance with the requirements of the TPA. First, it applied its mind to the proper interpretation of s 152AT and s 152AS. It noted that it could not make orders under those sections unless it was satisfied that the making of the order or determination will promote the LTIE.
It noted that in determining whether to grant the exemption applications to promote the LTIE, regard had to be had to the extent to which granting the exemptions would be likely to result in the achievement of the following objectives:
(a) promoting competition and markets for listed services;
(b)achieving any-to-any connectivity in relation to carriage services that involved communication between end-users; and
(c)encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which telecommunication services are supplied and any other infrastructure by which telecommunication services are, or are likely to become, capable of being supplied.
It then discussed each of those objectives in detail. In relation to the promotion of competition, it adopted a three-stage analysis:
(a)first, to identify those markets that would be affected by the granting of exemptions;
(b)secondly, to assess the state of competition within those markets; and
(c)thirdly, to assess whether price and services offered to consumers in those markets are likely to be better with the granting of exemptions.
It concluded that the relevant markets for the exemption applications could be described in the following way:
•Wholesale markets for the supply of fixed voice services to access seekers via resale (LCS and WLR or similar services) and “access based” supply (via the use of a DSLAM or MSAN in connection with the ULLS) (wholesale voice markets);
•Wholesale markets for the supply of bundled broadband and voice services to access seekers via resale and “access based” supply (via the use of a DSLAM or MSAN in conjunction with ULLS, LSS or possibly USS) (wholesale bundled broadband and voice markets);
•Retail markets for the supply of a bundle of fixed voice services to consumers (excluding carrier grade and application layer VOIP and mobile services) (retail voice markets); and
•Retail markets for the supply of bundled broadband and voice services over copper (xDSL, HFC or possibly, as weaker substitute, wireless technology) (retail bundled broadband and voice markets).
The ACCC then addressed the level of competition in the relevant markets which it had identified. It had regard to the potential for the development of competition in those markets and, in particular, to non-priced barriers to entry. It specifically considered whether granting exemptions would promote competition in the markets which it had identified and, in doing so, compared the “future without” to the “future with” in each of those separate markets.
It concluded that granting the exemptions in the geographic areas of the ESAs which it identified in appendix B to its reasons would be in the LTIE in the sense that it would result in the promotion of competition in the various markets.
Next it dealt with any-to-any connectivity, which it disposed of quickly by accepting Telstra’s submission that the exemption applications would not have any bearing on any-to-any connectivity.
Thirdly, it addressed the economically efficient use of and the economically efficient investment in infrastructure. In that regard, it concluded that granting exemptions in the particular ESAs which it identified in Appendix B:
would create an environment whereby participants have increased incentives to undertake efficient use of, and investment in infrastructure, relative to the position without the exemptions.
In its conclusion on the ultimate question which it had to address, whether the granting of the exemption would promote the LTIE, it said:
However, the ACCC considers that, on the basis on [sic] the information before it, promotion of competition (principally by promotion of ULLS-based competition) in fixed voice services is, subject to a number of conditions and limitations, likely to occur in the geographic areas consisting of those ESAs proposed by Telstra in its July Applications and October Applications, respectively, that, as at 30 June 2008:
• had 14,000 or more addressable SIOs; or
•had four or more ULLS-based competitors (including Telstra) within the ESA.
Access seekers have raised concerns that the Federal Government’s release of a Request for Proposals (RFP) to roll-out and operate a national broadband network (NBN) for Australia on 11 April 2008 increases the potential for investments made by access seekers to become “stranded” (i.e. made redundant by a fibre roll-out). The ACCC considers this issue at the “state of competition” section above, but notes that any additional investment required as a result of granting the exemption orders set out in Appendices E to H (Exemption Orders) is likely to be limited to a relatively small number of ESAs and by a limited number of access seekers. The reasons for this are:
•in the majority of the ESAs the subject of the Exemption Orders (233 of the 248) there are already 4 or more ULLS-based competitors (including Telstra) in each ESA. Some, if not all, of these ULLS-based competitors in each ESA will be already supplying a fixed voice service;
•of the remaining 15 ESAs, seven ESAs have two competitors present (including Telstra) and eight ESAs have three competitors present (including Telstra). Optus (which provides fixed voice services via MSANs) is present in 14 of the 15 ESAs; and
•therefore, in the majority of ESAs the subject of the Exemption Orders, competitively-priced alternative WLR/LCS-type services are likely to be available in the event of a price rise by Telstra.
However, the ACCC thought that the granting of the exemptions ought to be subject to conditions and limitations. In that regard, it said:
A key caveat to the above is that the ACCC considers granting exemptions will only be in the LTIE where ULLS is a readily available substitute to LCS and WLR. To this end, issues impeding access seekers’ access into exchanges (such as exchange capping and queuing) are, in some cases, significant barriers to entry to ULLS-based competition. The ACCC considers that exemptions will only be in the LTIE to the extent that access to exchanges is not impeded by such issues. The ACCC has devised conditions and limitations (discussed below) to address these issues.
The ACCC was of the opinion that by making the orders for exemption subject to those conditions, competition would be promoted. It also concluded that the granting of the exemptions would be likely to encourage the economically efficient use of and investment in relevant infrastructure. It was satisfied that the removal of LCS and WLR access regulations would, on the whole:
encourage access seekers to invest in ULLS-based DSLAM/MSAN infrastructure, and that, if they did so, this would be an efficient outcome.
It concluded that there ought to be a 12 month phase-in period for any exemption in order to provide an opportunity to current resellers of LCS and WLR to make the necessary adjustments to their business plans and provide them with sufficient time to begin implementing their DSLAM or MSAN roll-out and/or to make investments in and negotiate third party access to transmission capacity, voice switching services and other inputs.
It then considered what conditions and limitations ought to be imposed. It discussed capping, queuing, and the LSS to ULLS migration path and concluded that it was necessary to make a condition in respect to each of those matters because conduct of the kind described constituted a barrier to entry to Telstra’s competitors.
In respect of each application, the orders for exemption which the ACCC made were to come into effect 12 months after the date of release of the ACCC’s final decision on Telstra’s applications for an individual exemption.
The ACCC concluded that the exemptions should be granted only for a limited period and should expire on 31 December 2012 or on the expiry or revocation of either the LCS declaration or the WLR declaration or the ULLS declaration, whichever should first occur.
The orders exempted Telstra from SAOs in respect of the supply of LCS and WLR within the specified ESAs.
However, in each case, the exempting order was subject to conditions and limitations. The conditions and limitations addressed three barriers to entry which the ACCC had identified, namely capping, queuing and migration.
The conditions and limitations imposed obligations on Telstra in the event that Telstra developed and implemented a prescribed LSS to ULLS migration process. The conditions and limitations obliged Telstra, if it developed and implemented such a system, to provide for the migration of end-users from LSS to ULLS in the manner provided for in paragraph 5.3 of the conditions and limitations.
The orders for exemption were also expressed not to apply in respect of the supply of LCS to any queued access seeker in respect of which the access seeker is a queued access seeker.
The conditions and limitations also obliged Telstra to advise the ACCC within 24 hours of an exchange building becoming a capped exchange or potentially capped exchange. If one of the ESAs became a capped exchange, a potentially capped exchange or a constructively capped exchange, then, in those circumstances, the exemption ceased to apply. Lastly, it was a condition of the order for exemption that if Telstra ceased to supply ULLS to itself or to other persons within the ESAs, the exemption would cease to apply.

The ACCC also considered the question of class exemption and concluded that it would be appropriate to make orders in favour of Telstra’s competitors under s 152AS.
The ACCC made two orders for a class exemption under s 152AS(1) of the TPA which were to come into effect on the same date as the individual exemption orders and expire on the same date as those orders. Those orders exempted all carriers, with the exception of Telstra, from the SAOs in respect of the supply of LCS or WLR within the same ESAs. Those orders are in appendices I and J to the ACCC’s reasons.
It said its analysis and reasoning applied mutatis mutandis to the class exemption orders set out in Appendices I and J of the ACCC’s final decision, which it said were made as a consequence of the ACCC’s proposed orders in respect of Telstra’s applications.
The ACCC made such orders, notwithstanding Telstra’s submissions that no review would be available in the Tribunal for the class exemption orders but there would be a review available in relation to the individual exemption orders. They recorded Telstra’s submission:
Telstra submits that if an individual exemption order was overturned but not a class exemption, this would not be in the LTIE as exemption would be conferred on every carrier except Telstra. Telstra submits that to overcome this problem, paragraph 4 of the class exemptions should be amended to stipulate that, in the event that the Commission’s individual exemptions are overturned by the Tribunal, the class exemptions should cease to have effect.
THE APPLICATION TO THE TRIBUNAL AND THE TRIBUNAL’S REASONS
The second respondent applied to the Tribunal under s 152AV for a review of the ACCC’s decision. The Tribunal made the decision which is the subject matter of this review. It set aside the ACCC’s decision to grant Telstra orders exempting it from its obligations under s 152AR of the TPA as set out in Appendices E to H and set aside the class exemption orders set out in Appendices I and J made on or about 22 August 2008.
All parties to this application agree that the Tribunal had no power to set aside the class exemption orders in Appendices I and J to the ACCC Report. The consequences of that error by the Tribunal will be later addressed.
It was put to the Tribunal that the ACCC or the Tribunal when reviewing a decision of the ACCC must make an order for exemption upon being satisfied that the order will promote the LTIE. The alternative position, so the Tribunal noted, was that the state of satisfaction which is required by s 152AT(4) is a condition that must be satisfied before an order for exemption is made “and the decision maker is still required to take all relevant considerations into account in deciding whether or not to make an order”.
The Tribunal held that s 152AT(4) does not define the manner in which the power in s 152AT(3) is to be exercised. It held that the structure of the section was such that no duty lies upon the ACCC or the Tribunal when reviewing a decision of the ACCC to make an order for an exemption if the s 152AT(4) criterion is satisfied.
The Tribunal further held that it could not be accepted that the range of factors that the ACCC or the Tribunal was able to take into account in reaching the decision under s 152AT was “extremely limited”.
It concluded on this aspect:
Section 152AT does not specify any matters (save for the s 152AT(4) criterion) which the ACCC (or the Tribunal) must satisfy itself of before making or refusing to make an exemption order. The matter is otherwise left at large. The matters to be taken into account must be determined by implication and the subject matter, scope and purpose of Part XIC. It follows that it is for the ACCC (or the Tribunal) to determine the appropriate weight to be given to any relevant matter. (Reasons at [8])
Later in its reasons, it described this residual inquiry as “matters that go to discretion”. It also observed that Telstra did not address the Tribunal on the question of discretion.
The Tribunal considered the manner in which the technology and services are delivered, and addressed the barriers to entry and expansion.
It noted that while Telstra’s competitors had been given access to ULLS and LSS, Telstra’s dominant position has not been materially reduced. It said that the explanation was that there are barriers which stand in the way of entry. Those barriers, in some cases, were capable of empirical analysis and, in other cases, were not. It identified the barriers to entry:
(a)Telstra’s advantage of owning the network, a well-known brand, knowledge of the customer base and the benefit of consumer inaction;
(b)Telstra’s ability to engage in behaviour that would strategically delay entry which will increase the entrant’s cost;
(c)exchange capping;
(d)queuing;
(e)frustrating the use of mediation and conciliation in resolving disputes about access; and
(f)migrating of customers supplied with LSS-based services (bundled with a fixed voice service using LCS or WLR) to ULLS which provides both broadband and voice services and the delay occasioned.
The Tribunal recognised that the cost of the equipment, and in particular DSLAM equipment, was not a prohibitive barrier to competitively significant entry. The Tribunal noted that despite the barriers which it identified, there were a number of entrants who used DSLAM in order to access ULLS and LSS. That evidence was obtained from DSLAM tracker data which is gathered from websites of telecommunication service providers and reports of independent telecommunications market analysts. The second source was the information obtained by the ACCC pursuant to its RKR. Those two sources gave information for periods both prior to and subsequent to September 2007.
The Tribunal identified the number of competitors in each ESA and noted that there was at least one DSLAM competitor in each ESA the subject of the applications; there were two or more DSLAM competitors in 334 of the 387 ESAs; there were three or more DSLAM competitors in 270 of the ESAs; and more than four DSLAM competitors in 208 ESAs.
It did not know, because there was no evidence, the number of installed DSLAMs per ESA installed by each of the entrants.
The evidence did not allow the Tribunal to determine the extent of the spare capacity of the installed DSLAMs in total or in any of the particular ESAs and therefore the Tribunal could not determine the weight which should be given to the fact that the DSLAM infrastructure was capable of serving 2,483,673 lines and, of those lines, 1,439,794 were still available.
Also, because not all DSLAMs are capable of providing broadband services and standard voice services, the Tribunal could not ascertain the proportion of current voice service capable devices. It also noted that it was impossible to reach any conclusion regarding the available space in each exchange for the installation of new DSLAMs to accommodate service providers who wished to put in additional equipment.
The Tribunal noted that the increase in the number of entrants disclosed in the evidence and the aggregate size of their market share raised for consideration whether regulation was still required. It said:
A decision to remove regulated access requires a balance to be struck between competing factors. On the one hand there is the risk that continued regulation will result in market distortions, high prices and fewer choices. On the other, there is the risk that premature deregulation will permit the still-dominant incumbent (and on any view Telstra still has significant market power with 89% of all fixed voice lines being supplied over Telstra’s PSTN, of which approximately 80% are lines retailed by Telstra) to engage in anti-competitive conduct, which will distort the market in the long term. The choice to be made is between ex-ante regulation of access and prices and ex-post law enforcement to deter anti-competitive conduct. If there be any appreciable risk of harm to end-users, regulation will usually trump law enforcement: cf Re Telstra Corporation Ltd (No 3) (2007) 242 ALR 482, [316] and [326]. The decision should also balance the short-term benefits resulting from continued regulation, weighed against the potential for long term benefits that may flow from deregulation. (Reasons at [33])
It addressed Telstra’s argument for an exemption and, in particular, Dr Paterson’s evidence. It noted that the ACCC supported the adoption of the rule of thumb that Dr Paterson advocated, although the ACCC opted for a three plus approach rather than a one plus decision rule which Dr Paterson advocated.
It also observed that the ACCC added as an alternative that an order for exemption should be granted for an ESA that has 14,000 or more addressable SIOs. The Tribunal also noted that Telstra relied upon the report from Professor Cave who had promoted the ladder of investment hypothesis. The Tribunal warned itself that a regulatory authority ought to be confident that in deciding to withdraw regulatory protection at a lower rung of the ladder, the regulator does not leave any entrant at the mercy of the incumbent. Moreover, the regulatory authority ought to be confident that adopting Professor Cave’s hypothesis would not leave entrants facing higher barriers to entry than those entrants who came before them.
The Tribunal then turned its attention to the case put by Telstra. It said:
The case put by Telstra, including its one plus rule, was directed to showing that the s 152AT(4) criterion (that deregulation would promote the long-term interests of end-users) had been satisfied. The ACCC’s three plus rule or its alternative of an exchange with 14,000 addressable SIOs was directed to the same end. It is to be noted that Telstra did not address the Tribunal on how its discretion should be exercised if the s 152AT(4) criterion was met. This is, no doubt, because the discretion issue was only raised late in the day by the Tribunal itself, all parties (and the ACCC) having proceeded on the false premise that there was no discretion. (Reasons at [54])
The Tribunal was of the opinion that there was little empirical evidence to support Telstra’s argument that s 152AT(4) was satisfied. It said:
In large measure the argument was founded simply on the view of many (if not most) industrial organisation economists that “competition is the best regulator” because regulation will inevitably produce lack of choice, inefficient investment and disincentives to innovate, whereas removing regulation will produce the opposite results. (Reasons at [55])
The Tribunal rejected the arguments propounded by both Telstra and the ACCC based upon a rule of thumb. It was of the opinion that the competitive state of the market ought to be determined by reference to empirical evidence. It said:
The problem with a fixed rule of thumb in the area of deregulation is that it is just a shortcut. Simple numbers-based rules of thumb are not uncommonly used as a screening device to indicate thresholds beyond which markets might ordinarily be expected to work competitively. But a rule of thumb is a static indicator only and reveals nothing about market dynamics over time. (Reasons at [58])
It gave a number of reasons why evidence based on a rule of thumb approach did not properly identify the market dynamics and, in particular, the likely future behaviour by Telstra to present entrants and any potential entrants. It said:
Put another way, it is vital to have reliable hard information on these matters as well as knowledge of the asset and management capacity of the entrants, their willingness and ability to be competitive in the market and the response of their rivals, before any authoritative statement can be made on whether entry has, or is likely to, promote competition in the market. (Reasons at [68])
It concluded at [71]:
There is simply no empirical evidence before the Tribunal from which it is possible to arrive at any, even any tentative, conclusion about market behaviour and whether entry is likely to produce a competitively significant long run impact in the relevant markets.
Having rejected Telstra’s evidence and the ACCC’s contentions, the Tribunal indicated what it described as a “possible framework”. It said:
It is hard to deny that, if it were possible, it would be very useful to formulate a set of rules that provide a roadmap for deregulation. If a roadmap were to be developed based on today’s technology and knowledge, it would include at least the following eight factors: (a) the total number of addressable SIOs in the market; (b) the number of exchanges in which there is at least one entrant; (c) the number of entrants; (d) the total number of addressable SIOs broken down on an exchange by exchange basis in the subject exchanges; (e) the share of SIOs that the entrants have taken from the incumbent; (f) the physical capacity and operational willingness of the entrants to take more market share; (g) the cost and ease of installing new infrastructure; and (h) the capacity and technology status of each DSLAM in each exchange. Such an inquiry would at least provide a basis for drawing inferences on whether deregulation is likely to result in the achievement of the objective of promoting competition. (Reasons at [72])
It concluded:
The Tribunal is not satisfied that the making of the exemption orders sought by Telstra will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services. It is not, therefore, necessary to consider matters that go to discretion. Nor is it necessary to consider whether it is legitimate, for the ACCC or the Tribunal, to reach the satisfaction required by s 152AT(4) by imposing conditions or limitations. (Reasons at [74])
It then said in relation to the orders made under s 152AS by the ACCC:
The analysis and reasoning applies mutatis mutandis to the class exemption orders set out in appendixes I and J of the ACCC’s final decision. The class exemption orders were made as a consequence of the ACCC’s proposed orders in respect of Telstra and, like those orders, would have exempted service providers other than Telstra from the SAOs in respect of the LCS and WLR in any one of the subject exchanges. (Reasons at [75])
It made the orders which we have mentioned above, including the orders purporting to set aside the class exemption orders.
As we have already noted, it was agreed by all parties that the Tribunal did not have the power to set aside the class exemption orders, there being no power in the Tribunal to review orders made under s 152AS or s 152ASA.
A NEED TO DISPOSE OF THIS APPLICATION URGENTLY
It was contended by Telstra that this application had to be heard urgently, because otherwise, if Telstra were successful, it would not enjoy the fruits of victory.
Section 152AT(10) deems a decision to have been made in accordance with a carrier’s or carriage service provider’s application if a decision is not made by the ACCC within six months after receiving the application. Further, s 152AW(5) deems a decision to have been made by the Tribunal setting aside the ACCC’s decision if the Tribunal does not make a decision at the end of six months after receiving the application for review. The application for review was dated 12 September 2008 and was received by the Tribunal on that day.
Telstra contended that if this Court were to quash the Tribunal’s decision and remit the application for review to the Tribunal, the Tribunal would have to make a decision by 12 March 2009 or extend the period for review under s 152AW(6) for a period of three months.
Telstra further contended that it could not approach the Tribunal for an extension in advance of this Court making its orders for two reasons: first, because it could not tell the Tribunal what orders this Court might make; and secondly, because the Tribunal could not make an order under s 152AW(6) in circumstances where its decision was still on foot.
We do not need to decide whether those contentions are correct. We accept that the commercial imperative to which this Court should respond is to make its orders and publish its reasons so that Telstra does not succeed on this application but only obtain a pyrrhic victory.
Because of those matters, we have had to consider these important questions over a shorter period than we would have wished. That is not the fault of any of the parties but a result of the legislation.
If Telstra’s contentions on this point are correct, and they appear to carry some weight, and the Tribunal makes a decision near the end of the six month period, an aggrieved party to the review may not be able in a practical sense to exercise its rights under s 5 of the ADJR Act or under s 39B of the Judiciary Act. It seems to us that s 152AW does not contemplate a further application for judicial review.
THE CONSTRUCTION OF S 152AT
Telstra challenged the Tribunal’s construction of s 152AT contending, as it had before the Tribunal, that if the ACCC (or the Tribunal when reviewing the ACCC decision) is satisfied that the making of the order will promote the LTIE, the order must be made. It contended that there was no residual discretion reposing in the regulator or the Tribunal in the event that the level of satisfaction required in s 152AT(4) was reached. The ACCC did not support that submission. In its written submissions, it contended that there was a limited discretion: see Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 and Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124. The second to seventh respondents to this application contended, as they had before the Tribunal, that if the ACCC reached the level of satisfaction required in s 152AT(4), the ACCC was entitled not to make the order if, in the exercise of the ACCC’s discretion, it was of the opinion that the order should not be made.
The single object of Part XIC is contained in s 152AB(1) which is to promote the LTIE. There is no other object to be served by this Part of the legislation. In this respect, the provisions of s 152AT(4) are to be distinguished from the statutory provisions considered in Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 and Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124.
Of course, the ACCC and the Tribunal, in deciding whether an order would promote the LTIE, must have regard to the matters in paragraphs (c), (d) and (e) of s 152AB(2) but that is not to deny the fact that there is only a single object in Part XIC of the TPA. That proposition is reinforced by s 152AB(3) which limits the matters to which the ACCC and the Tribunal may have regard to those contained in s 152AB(2).
The purpose of s 152AL, which allows the ACCC to make a non-reviewable decision, is, like s 152AB(1), the promotion of the LTIE: s 152AL(3)(d). Consistently with s 152AB(1), a declaration is made under s 152AL when the ACCC is satisfied that the making of the declaration will promote the LTIE. An examination of s 152AL shows that the ACCC need only be satisfied of that matter to make the appropriate declaration.
The purpose of s 152AT (and the other sections which deal with applications for orders for exemption) is to relieve the carrier or carriage service provider who is bound by the s 152AL declaration from the consequences of that declaration insofar as the declaration requires the applicant to comply with s 152AR and, in particular, s 152AR(3).
Like s 152AL, and in conformity with s 152AB(1), the criterion for making the order exempting the party from the consequences of the s 152AL declaration is the promotion of the LTIE.
Section 152AT(4) precludes the ACCC from making an order under s 152AT(3)(a) unless satisfied that the making of the order will promote the LTIE.
In our opinion, s 152AT(4) is cast in its terms so that the ACCC should not make an order under s 152AT(3)(a) to relieve a carrier or carriage service provider from the consequences of the s 152AL declaration unless positively satisfied that the declaration, which had previously been made to promote the LTIE, should no longer constrain that carrier or carriage service provider. The effect of an order for exemption under s 152AT is to reverse the effect of the previous declaration made under s 152AL. In those circumstances, it is not surprising that s 152AT(4) says that the order should not be made unless the ACCC or the Tribunal is so satisfied.

In the present case, as will be apparent from our consideration of Ground 7, the Tribunal failed to pay appropriate regard to all of the objectives mandated by s 152AB(2) and thus failed to meet the requirements of the statutory test.
In this respect, it may be said that it failed to pay appropriate regard to the long-term. However, we do not think that the references relied upon by Telstra as indicating an undue or inappropriate focus on the short-term with a concomitant disregard for the long-term makes out Ground 4 as a separate matter. The Tribunal focussed on the present state of competition in the relevant markets and found Telstra’s evidence going to this aspect unsatisfactory and lacking weight. It regarded proof of the existing state of competition by empirical evidence as the starting point for any consideration by it of objective (c). Because it was not satisfied that Telstra had met the Tribunal’s expectations in this regard, the Tribunal did not move on to consider any other matter. This was an error, not because of a misplaced focus on the short-term, but rather because it involved the application of the wrong test in the sense discussed in respect of Ground 7 below.
Accordingly, we do not think that Telstra has made out this ground as a separate matter, although some of the considerations advanced by Telstra in support of this ground are relevant to our consideration of Grounds 1, 3 and 7.
Ground 5
Ground 5 need not now be considered as it was abandoned before the hearing commenced.
Ground 6
In making the Decision, the first respondent made an error of law by misconceiving the nature of its jurisdiction and the scope of its powers and thereby disabling itself from considering whether the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purpose of s 152AT(4) of the TPA.
(This ground constituted the basis for the challenge to the Tribunal’s decision to set aside the class exemptions.)
There was no application before the Tribunal to review the decision of the ACCC to grant the two class exemption orders which it made on or about 22 August 2008 in favour of Telstra’s competitors. Nor could there have been such an application. For the reasons already given, such a decision was not reviewable by the Tribunal.
The Tribunal took it upon itself to make the determination setting aside the class exemption orders set out in appendices I and J to the ACCC Report.
All parties on this application accepted that the Tribunal did not have power to do that which it did.
Telstra contended that by the purported exercise of that power, the Tribunal must have misinformed itself of the future “with” and “without” test by assuming that in the “without” world there would be no class exemptions when in fact the class exemptions would continue to apply.
That is logically sound but, in fact, the Tribunal never descended into an analysis of a future “with” and “without” world because it concluded at an antecedent point that there was no empirical evidence before it to support Telstra’s application.
In those circumstances, we do not think that it could be said that the purported exercise of power by the Tribunal infected its decision to set aside the ACCC’s orders in relation to the individual exemption orders.
We therefore accept the contention of the second to seventh respondents that that part of the Tribunal’s decision can be severed from the part of its decision which it had jurisdiction to make. In our opinion, if this were the only matter that Telstra was able to establish on this application, there would be no reason to remit the matter to the Tribunal for further consideration. However, for reasons already given and about to be given, we think there are other reasons why the matter should be remitted.
Ground 7
In making the Decision, the First Respondent failed to observe procedures which were required by law to be observed in connection with the making of the Decision, and failed to take into account a relevant consideration it was bound to take into account, because it failed to have regard to the objective of encouraging the economically efficient use of, and the economically efficient investment in, relevant infrastructure as required by s 152AB(2)(e) of the TPA in determining whether it was satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purposes of s 152AT(4) of the TPA.
The particulars of Ground 7 were as follows:
(i)In making the Decision, the First Respondent failed to have regard to:
(A)the legitimate commercial interests of the Applicant (as the supplier of the LCS and the WLR) as required by s 152AT(4) and ss 152AB(2)(e) and 6(b) of the TPA; and
(B)the incentives for the economically efficient use of, and the economically efficient investment in, relevant infrastructure, with and without the making of individual exemption orders, as required by s 152AT(4) and ss 152AB(2)(e) and 6(c) of the TPA.
(ii)In the result the Decision is invalid (or liable to be set aside) as infected by jurisdictional error at general law and on the grounds stated in s 5(1)(b) and/or ss 5(1)(e) and 5(2)(b) of the ADJR Act.
Telstra contended that the Tribunal applied the wrong test and thus made an error of law by considering only the first of the objectives set out in s 152AB(2)(c) to (e) of the TPA (the objective of the promotion of competition) and by ignoring the remaining objectives (especially objective (e)). Telstra argued that the Tribunal concluded that it was not satisfied that the first objective had been met and thereafter failed to pay any regard to the requirements of s 152AB(2)(e) as further explained by ss 152AB(6), 152AB(7), 152AB(7A) and 152AB(7B).
The proposition advanced by Telstra was that, in the present case, the Tribunal was bound to consider each of the objectives set out in ss 152AB(2)(c) and 152AB(2)(e) in the manner required by s 152AB(2) and to determine whether, having weighed all of the relevant considerations, Telstra’s applications for exemption met the requirements of the LTIE.
Section 2 of the TPA is in the following terms:
The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
Part XIC of the TPA gives effect to that general object by mandating a further and more specific single object in respect of access to telecommunications infrastructure and services viz the LTIE.
In determining whether a particular thing (in this case, whether the grant of individual exemptions to Telstra pursuant to s 152AT of the TPA) will promote the LTIE, the objective of promoting competition in markets for listed services is only one of the criteria to which the relevant decision maker must have regard.
We have described the relevant legislative provisions at [7] to [38] above.
In the present case, the relevant decision makers (the ACCC and the Tribunal) were obliged to have regard to:
… the extent to which [the Telstra Exemption Applications] are likely to result in the achievement of …
the three objectives set out in sub-paragraphs (c) to (e) of s 152AB(2). The three objectives set out in those sub-paragraphs constitute matters to which consideration must be given but also comprise the only matters to which consideration may be given.
As is apparent from the terms of s 152AB(4) to (8):
(a)Matters to which regard may be had in respect of objective (c) are set out in s 152AB(4); and
(b)Matters to which regard may be had in respect of objective (e) are set out in s 152(6) and s 152AB(7A).
The matters referred to in ss 152AB(4), 152AB(6) and 152AB(7A) are not the only matters to which regard may be had by the decision maker when weighing objectives (c) and (e).
The ACCC and the Tribunal were thus obliged to consider and give appropriate weight to the extent (emphasis added) to which the making of the exemption orders was likely to result in (emphasis added) the achievement of each of the stated objectives.
When the expression “… regard must be had to …” is used in a statute in respect of a particular criterion or factor to be considered by a decision maker, the decision maker is bound to treat such a factor as a central or fundamental element in the making of the relevant decision (see the discussion of these principles by Rares J in Telstra Corp Ltd v ACCC [2008] FCA 1758 at [103] to [112]).
In the present case, the Tribunal was bound to have relevant regard to more than objective (c) (the promotion of competition).
It was common ground amongst the parties in this case that objective (d) (the objective of achieving any-to-any connectivity in relation to carriage services that involved communication between end-users) was not a matter which was likely to be affected in any way by the grant of the exemptions sought by Telstra. Once the decision makers considered that matter and came to a view that the parties were correct in the position which they had adopted in relation to it, no further consideration of objective (d) was required to be undertaken by the decision makers. It is not clear whether the Tribunal turned its mind at all to objective (d) or whether it simply accepted the position adopted by the parties without further consideration on its part.
A decision maker confronted with a decision of the type which obliges the decision maker to comply with the requirements of s 152AB(2) must have regard to the extent to which the subject matter of the decision maker’s decision is likely to result in the achievement of each of the objectives set out in (c) to (e) of s 152AB(2), as amplified and explained in the succeeding sub-sections of s 152AB. In our view, no individual objective has primacy in terms of its weight or influence upon the relevant decision over either of the other objectives. Section 152AB(2) requires that the decision maker give consideration as to whether the thing under consideration is likely to result in the achievement of the objectives set out in sub-paragraphs (c) to (e) and, if so, the extent to which it is likely to result in the achievement of those objectives. Necessarily, the decision maker must have regard to each of the objectives and come to a view as to whether the particular thing will promote the LTIE and, if so, the extent to which it will do so.
In this case, both the ACCC and the Tribunal were both required to consider whether the individual exemptions claimed by Telstra, if made the subject of exemption orders, would promote the LTIE. Further, each of those decision makers was required to have regard to the extent to which those exemptions were likely to result in the achievement of each of the objectives set out in s 152AB(2).
In our view, the statute does not authorise an approach which accords primacy to objective (c). Even if it be the fact that the grant of the exemptions to Telstra in the present case may not be likely to or has not been demonstrated as likely to result in the achievement of the objective of promoting competition in markets for listed services, that circumstance does not, of itself, entitle or require the decision maker to cease the process of consideration required by s 152AB(2) and thus to pay no regard whatsoever to the other objectives set out in sub-paragraphs (d) and (e) of s 152AB(2). There may be tension between objectives. One may carry more weight in a given case than the others. But they must all be considered and weighed in every case.
In the present case, in our view, the Tribunal impermissibly confined itself to a consideration of objective (c) (the objective of promoting competition in markets for listed services).
In essence, the Tribunal concluded that it was not satisfied that the making of the exemption orders would promote the LTIE because it was not satisfied that the exemptions would be likely to result in increased competition in the relevant markets (see the extracts from the Tribunal’s reasons at [113] and [116]-[122] above). It is apparent from a consideration of the Tribunal’s reasons that it concluded that objective (c) was not satisfied in the present case because Telstra had failed to prove to a satisfactory level the existing competitive state in the relevant markets by tendering empirical evidence of that state of competition. In the Tribunal’s view, Telstra’s case for exemption therefore failed at the outset.
It is true that the Tribunal adverted to the “ladder of investment” hypothesis advanced by Professor Cave. But, in our view, it did so in the context of assessing whether that hypothesis could justify a conclusion on the part of the Tribunal that objective (c) of s 152AB(2) had been satisfied. In our judgment, the Tribunal did not give any consideration to objective (e). It should have done so.
The approach of the Tribunal in the present case was to conclude that it could not reach the requisite level of satisfaction for the purposes of s 152AT(4) unless it was satisfied that the grant of the exemption orders sought by Telstra would be likely to result in enhanced competition in the relevant markets, and that it could not be satisfied of that matter unless the existing state of competition was proven in the proceedings before it by way of empirical evidence. Having reached that conclusion, the Tribunal did not move on to have regard to objective (e).
In our view, by taking this approach to its consideration of the matter, the Tribunal applied an incorrect construction of s 152AB and of s 152AT. By approaching the matter in the way that it did, the Tribunal failed to consider the extent to which objective (e) might be achieved if the exemptions sought by Telstra were granted. In effect, the Tribunal gave primacy to objective (c), concluded that the objective had not been satisfied to any extent in the present case and then held that Telstra had not satisfied the test for the LTIE embodied in s 152AB. For that reason, the Tribunal concluded that it could not reach the level of satisfaction required by s 152AT(4).
In taking this approach, the Tribunal made an error of law which is reviewable by this Court. In our view, this error vitiates the Tribunal’s decision in its entirety. Accordingly, the Tribunal’s decision should be wholly set aside on this ground pursuant to ss 5(1)(e), 5(1)(f) and 5(2)(b) of the ADJR Act.
Ground 8
In making the Decision, the first respondent made an error of law by concluding that s 152AT(4) of the TPA does not impose a duty to make an individual exemption order in circumstances where it is satisfied that the making of such an order would promote the LTIE (or otherwise define the manner in which the power in s 152AT(3) of the TPA is to be exercised).
We think for the reasons given in [137]-[146] that this ground has been made out. We think the Tribunal proceeded upon the basis that there was some form of residual discretion reposing in the Tribunal to make or not make an order even where the Tribunal was satisfied that the making of an order exempting the applicant would promote the LTIE.
We think in a consideration of an application under s 152AT that the ACCC (or the Tribunal on review) must decide whether it is satisfied that an order exempting the applicant will promote the interests of the LTIE. That decision must be made by reference to paragraphs (c), (d) and (e) of s 152AB(2). Those are the only matters that may be considered: s 152AB(3).
However, in considering those particular matters in paragraphs (c), (d) and (e) of s 152AB(2), the ACCC must have regard to the matters in the further subsections of s 152AB. In that regard, the ACCC is not constrained by the matters referred to in those further subsections.
In addressing the question as to whether or not the ACCC is satisfied that the order exempting will promote the LTIE, the ACCC should consider whether there are conditions or limitations that could be imposed in the making of the order which would assist the decision maker to reach that level of satisfaction.
Once the decision maker has reached the level of satisfaction provided for in s 152AT(4), there is no residual discretion to refuse to make the application and the order must be made for the reasons previously given.
In our opinion, this ground has been made out. It is clear from the Tribunal’s reasons that it believed that it had a residual discretion to refuse to make the application even if satisfied that an order exempting Telstra from its obligations under s 152AR would promote the LTIE.
To that extent, the Tribunal fell into error by assuming a jurisdiction it did not have and thereby acting in excess of jurisdiction.
Ground 9
In making the Decision, the first respondent made an error of law by concluding that it was not necessary to consider whether it could be satisfied that the making of individual exemption orders would promote the LTIE for the purposes of s 152AT(4) of the TPA by imposing conditions or limitations on such orders pursuant to ss 152AT(5) and 152AW(1) and (2) of the TPA.
Telstra contended that the Tribunal made the decision on the basis that it was not satisfied that the making of individual exemption orders sought by the applicant would promote the LTIE and therefore that it was not necessary to consider whether it was legitimate for it to reach the satisfaction required by s 152AT(4) of the TPA by imposing conditions or limitations. In that regard, it referred to [74] of the reasons which we have set out at [122] above.
Telstra contended that where the Tribunal is conducting a review under s 152AW of a decision of the ACCC which had concluded that an order exempting an applicant should be made but that it should be subject to limitations and conditions, the Tribunal was obliged to consider the imposition of conditions or limitations before concluding that it is able to set aside the ACCC’s decision pursuant to s 152AW(1)(b) of the TPA.
We think the contention advanced by Telstra that the Tribunal did not apply its mind to the conditions or limitations before concluding that the decision made by the ACCC making the orders under s 152AT ought to be set aside must be accepted. We think that the Tribunal proceeded on the basis contended for by Telstra, in that it assumed that a consideration of conditions or limitations did not arise until after it had determined that it was satisfied that the making of the orders exempting Telstra would promote the LTIE.
For the reasons we have already given in relation to the construction of s 152AT(5), we think, with respect, the Tribunal erred. We reject the suggestion implied in the Tribunal’s reasons that it is appropriate to proceed on a two stage basis: first, by determining whether it is satisfied that an order exempting would promote the LTIE; and secondly, if so satisfied, whether it is of the opinion that it ought to impose conditions or limitations.
We think the question of conditions or limitations must be approached at the same time as the ACCC (or the Tribunal on review) is considering whether it is satisfied that an order exempting will promote the LTIE. If it were otherwise and the two stage process were appropriate, then, of course, it would rarely be the case that any conditions or limitations would be imposed because the decision maker would have already reached the conclusion that the order which has been sought should be made because it would promote the LTIE. That would leave s 152AT(5) with little work to do.
It is our opinion that s 152AT(5) is always engaged in a consideration of any application under s 152AT or the consideration of any order which might be made under s 152AT(5). An instance of how s 152AT(5) can be used is, in our opinion, the way in which the ACCC used it on Telstra’s applications to it. It has used the subsection for the purpose of imposing a regime which, at the very least, reduced the barriers to entry.

We think therefore, with respect, that the Tribunal asked itself the wrong question. The question that the Tribunal should have asked itself is whether it was satisfied that an order should be made exempting Telstra from its obligations under s 152AR(3) of the TPA subject to whatever conditions or limitations were appropriate that would promote the LTIE.
CONCLUSION
For all of the above reasons, we think that the Tribunal’s decision must be set aside and the matter remitted to the Tribunal to be decided according to law. Although Telstra has not succeeded on every point which it argued, it has succeeded in overturning the Tribunal’s decision. We think that, in those circumstances, the second to seventh respondents should pay Telstra’s costs of and incidental to the application before us.
The Tribunal filed a submitting appearance save as to costs.
The ACCC appeared before us and addressed the Court on a number of matters. We found those submissions most helpful. The ACCC was, of course, the primary decision-maker.
In our view, it would not be appropriate to visit the costs of the ACCC’s participation in the matter upon the second to seventh respondents. We think that the ACCC should pay its own costs in relation to Telstra’s application. Therefore, the orders of the Court will be:
1.Order that, pursuant to ss 5 and 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B(1A)(c) of the Judiciary Act 1903 (Cth):
(a)the decision of the Australian Competition Tribunal made on 22 December 2008 in the matter of Applications under s 152AV of the Trade Practices Act 1974 (Cth) by Telstra Corporation Limited (Tribunal File No 2 of 2008) be set aside; and
(b)those applications be remitted to the Tribunal for further consideration and determination according to law.
2.Order that the second to seventh respondents pay the applicant’s costs of and incidental to the application.

I certify that the preceding two hundred and ninety-six (296) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Lander and Foster.
Associate:
Dated: 11 March 2009

Counsel for the Applicant: J E Griffiths SC with A J Payne and M Allars

Solicitor for the Applicant: Mallesons Stephen Jaques

Counsel for the Second to Seventh Respondents: N J O'Bryan SC with M J Hoyne

Solicitor for the Second to Seventh Respondents: Herbert Geer

Counsel for the Eighth Respondent: C Caleo SC with P Gray

Solicitor for the Eighth Respondent: DLA Phillips Fox

Date of Hearing: 23 and 24 February 2009

Date of Judgment: 11 March 2009

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 30 of 2009

JUDGES:	JACOBSON, LANDER AND FOSTER JJ
DATE OF ORDER:	11 MARCH 2009
WHERE MADE:	SYDNEY

JUDGES:	JACOBSON, LANDER AND FOSTER JJ
DATE:	11 MARCH 2009
PLACE:	SYDNEY

Counsel for the Applicant:	J E Griffiths SC with A J Payne and M Allars
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Second to Seventh Respondents:	N J O'Bryan SC with M J Hoyne
Solicitor for the Second to Seventh Respondents:	Herbert Geer
Counsel for the Eighth Respondent:	C Caleo SC with P Gray
Solicitor for the Eighth Respondent:	DLA Phillips Fox

Date of Hearing:	23 and 24 February 2009
Date of Judgment:	11 March 2009