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Chorus Ltd v Commerce Commission

Chorus Ltd v Commerce Commission

Case [2014] NZCA 440 8 September 2014

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA229/2014
[2014] NZCA 440

BETWEEN	CHORUS LIMITED Appellant
COMMERCE COMMISSION First Respondent
VODAFONE NEW ZEALAND LIMITED Second Respondent
SPARK NEW ZEALAND LIMITED (FORMERLY TELECOM NEW ZEALAND LIMITED) Third Respondent
ORCON LIMITED Fourth Respondent
AND	OTHERS Fifth to Thirty-second Respondents*

Hearing:	31 July and 1 August 2014
Court:	Ellen France, Stevens and White JJ
Counsel:	D J Goddard QC, A M Peterson and T Smith for Appellant J A Farmer QC, J D Every-Palmer and J L W Wass for First Respondent P J Radich QC and M S Smith for Second Respondent S E Fitzgerald and E L Rae for Third Respondent M B Wigley for Fourth Respondent and interveners No appearances for the other Respondents
Judgment:	8 September 2014 at 8.30 am

JUDGMENT OF THE COURT

AThe questions raised in this appeal are answered as follows:
1.      Did the Commerce Commission in fact fail to determine what inferences could reliably be drawn from the two benchmarks about the likely cost of providing the UBA service in New Zealand, and thereby err in law?
Answer: No.
2.      Did the Commission in fact adopt the Swedish price as an upper band, and thereby err in law?
Answer: No.
3.      Did the Commission in fact fail to consider s 18 other than in the context of price point selection, and thereby err in law?
Answer: No.
4.      Did the Commission in fact fail to consider whether a price above $10.92 would be more consistent with s 18, and thereby err in law?
Answer: No.
5.      Did the Commission fail to consider whether a price reduction of this magnitude was consistent with the s 18 purpose, having regard to the limited information available to it about the cost of providing the UBA service in New Zealand, and thereby err in law?
Answer: No.
6.      If “yes” to any of the above, what remedy should be granted?
Answer: No response required.
BThe appeal is dismissed.
CThe appellant is to pay the costs of each of the first to fourth respondents for a complex appeal on a band A basis with usual disbursements to be fixed by the Registrar, including travel and accommodation expenses for out of town counsel. We certify for two counsel for the first respondent.

____________________________________________________________________

REASONS OF THE COURT

(Given by White J)

Table of Contents

Para No

Introduction [1]
Background [7]

Deregulation  [8]
Regulation  [11]
UBA prices  [17]
The appeals  [20]

Statutory framework [22]

The Commission  [23]
Process  [24]
Definitions  [27]
Purpose  [38]
Procedure  [46]
Appeals  [48]
Summary  [49]

The Commission’s determination [51]

Discussion Paper  [54]
Draft determination  [56]
Chorus’s submissions on draft determination  [64]
UBA conference  [65]
Professor Vogelsang’s report  [67]
Update Paper  [72]
Chorus’s submissions on Update Paper  [80]
The final determination  [81]

Scope of appeal [107]
First question – Did the Commission in fact fail to determine
what inferences could reliably be drawn from the two benchmarks
about the likely cost of providing the UBA service in New Zealand,

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Chorus Ltd v Commerce Commission

Details

AGLC: Chorus Ltd v Commerce Commission [2014] NZCA 440
Case: [2014] NZCA 440
Decision Date: 8 September 2014 at 8.30 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand recently considered an appeal brought by Chorus Ltd (Chorus) against a decision of the Commerce Commission (the Commission) regarding the price for the unbundled bitstream access (UBA) service. The Commission had determined that the price for the UBA service should be $10.92 per month, which was significantly lower than the previous price of $21.46. Chorus challenged the Commission's determination on several questions of law, which were addressed by the Court of Appeal. The Court found that the Commission had not erred in law in its determination of the UBA price and dismissed Chorus's appeal.

The Court first addressed the issue of whether the Commission had failed to determine what inferences could reliably be drawn from the two benchmarks about the likely cost of providing the UBA service in New Zealand. The Court found that the Commission had correctly identified Denmark and Sweden as comparable countries and had used their prices to benchmark the UBA price. The Court further found that the Commission had not erred in its evaluative judgment in selecting the price point for the UBA service, as it had taken into account the differences in comparability between the benchmark countries and New Zealand and had considered the statutory purpose provision (s 18) in its determination.

The Court also found that the Commission had not adopted the Swedish price as an upper band and had not failed to consider s 18 other than in the context of price point selection. Furthermore, the Court found that the Commission had not failed to consider whether a price above $10.92 would be more consistent with s 18 or whether a price reduction of this magnitude was consistent with the s 18 purpose. The Court concluded that the Commission's decision-making was governed by the new initial pricing principle and s 18, and there was no basis for suggesting that s 18 imported proportionality as an independent consideration.

As a result of the Court's negative answers to the first five questions of law, it did not need to address the sixth question regarding the remedy that should be granted. The appeal was dismissed, and Chorus was ordered to pay the costs of the first to fourth respondents for a complex appeal on a band A basis.

Orders