Chorus Ltd v Commerce Commission

[2014] NZHC 690

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-9923 [2014] NZHC 690

UNDER

the Telecommunications Act 2001

IN THE MATTER OF

an appeal from a decision of the
Commerce Commission

BETWEEN

CHORUS LIMITED Appellant

AND

COMMERCE COMMISSION First Respondent

VODAFONE NEW ZEALAND LIMITED

Second Respondent

TELECOM NEW ZEALAND LIMITED Third Respondent

ORCON LIMITED Fourth Respondent

2TALK LIMITED AND OTHERS Fifth Respondent

INTERNET NZ, CONSUMER NEW ZEALAND AND TELECOMMUNICATIONS USERS ASSOCIATION NEW ZEALAND INC Interveners

Hearing:

17-19 March 2014

Counsel:

D J Goddard QC with A M Peterson and T D Smith for
Appellant
J A Farmer QC with J D Every-Palmer and J L W Wass for First
Respondent
P J Radich with T Thursby for Second Respondent

S E Fitzgerald with C R Shrive for Third Respondent M B Wigley for Fourth Respondent and Interveners No appearance for Fifth Respondents

Judgment:

8 April 2014

CHORUS LIMITED v COMMERCE COMMISSION & ORS [2014] NZHC 690 [8 April 2014]

JUDGMENT OF THE HON JUSTICE KÓS

Index

Introduction ..........................................................................................................[1] Issues for determination ......................................................................................[8] Appeals under s 60 .............................................................................................[10] Statutory framework .........................................................................................[22] Fletcher Inquiry       [23] The Act   [30] Commission’s pre-decision process...................................................................[44] Before the draft determination  [45] Draft determination  [48] UBA conference  [62] Professor Vogelsang’s report  [63] Commission’s Update Paper  [71] Decision appealed ...............................................................................................[83]

Issue 1: Did the Commission in fact adopt the Swedish price as an upper bound, and thereby err in law? .......................................................................[100]

Submissions  [100] Discussion  [108] Conclusion  [119]

Issue 2: Did the Commission in fact fail to consider s 18 other than in the context of price point selection, and thereby err in law?..............................[121]

Submissions  [121] Discussion  [129] Conclusion  [141]

Issue 3: 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, and thereby err in law? .........[143]

Discussion  [152] Conclusion  [157]

Issue 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? ..........[158]

Issue 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? ..........................................[158]

Submissions  [159] Discussion  [165] Conclusion  [172] Issue 6: If “yes” to any of the above, what remedy should be granted? .....[173] Conclusions .......................................................................................................[174] Result .................................................................................................................[180]

Introduction

[1]      Unbundled  bitstream  access  (UBA)  is  a  service  offered  by  Chorus.    It involves carrying broadband traffic back and forth between end users (consumers) and access seekers (service providers) across Chorus’s copper local loop, through its exchange (or a remotely located cabinet), and through Chorus’s data switch.  There it is handed over to (or from) the access seeker’s network.

[2]      Chorus’s pricing for this service is regulated.  The price paid is the sum of two parts:   the unbundled copper local loop price (the UCLL price,…