Trade Practices Act 1974 - Class Exemption (Variation) Determination No. 1 of 2009

Administered by Department of Communications and the Arts

Legislation au F2009L04298 Not in force Legislative Instrument

Legislation content

 

 

EXPLANATORY STATEMENT

 

Issued by the Australian Competition and Consumer Commission

 

Class Exemption (Variation) Determination No. 1 of 2009 in respect of WLR

 

Trade Practices Act 1974

 

 

Legislative Provisions

Section 152AS of the Trade Practices Act 1974 (the TPA) provides that the Australian Competition and Consumer Commission (ACCC) may make, by written instrument, a class determination exempting each of the members of a specified class of carrier or of a specified class of carriage service provider from any or all of the standard access obligations (SAOs) referred to in section 152AR of the TPA.

A class determination under section 152AS of the TPA may be unconditional or subject to such conditions or limitations as are specified in the determination.

The ACCC must not make a class determination under section 152AS of the TPA unless the ACCC is satisfied that the making of the determination will promote the long-term interests of end-users of carriage services or of services supplied by means of carriage services (LTIE), as further defined in section 152AB of the TPA.

The instrument setting out the class determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Purpose

The purpose of the variation instrument is to vary the existing WLR class determination made by the ACCC in August 2008, to align it with the WLR individual exemption order made by the Australian Competition Tribunal on 24 August 2009.

Background

The wholesale line rental (WLR) service involves the provision of a basic line rental service that allows the end-user to connect to the access provider’s public switched telephone network (PSTN). It provides the end-user with:

         the ability to make and receive standard PSTN voice calls; and

         a telephone number.

The ACCC decided to extend the expiry date of the declaration of the WLR under section 152ALA of the TPA from 31 July 2009 for five years. The WLR had previously been declared by the ACCC in July 1999 and August 2006. Declaration means that an access provider supplying the WLR is subject to a number of SAOs pursuant to section 152AR of the TPA. Terms of access can be governed by commercial negotiation, the terms of an access undertaking or, in the absence of an accepted access undertaking, by ACCC determination in an access dispute.

On 9 July 2007 and 12 October 2007, Telstra Corporation Limited (Telstra) lodged two applications with the ACCC under section 152AT of the TPA seeking individual exemptions from the SAOs in respect of the supply by Telstra of the WLR in a total of 387 Exchange Service Areas (ESAs) in metropolitan areas of Australia (the Exemption Applications).

At that time, the ACCC decided to consider whether a class determination should be granted to members of a specified class of carrier or of a specified class of carriage service provider from any or all of the SAOs in conjunction with its consideration of whether to make the orders sought by Telstra in its Exemption Applications.

The ACCC decided to make individual exemption orders under section 152AT with respect to Telstra’s supply of the WLR (the WLR individual exemption orders), but specified a number of conditions.

Following consultation with parties, the ACCC determined that making a class exemption in favour of carriers and carriage service providers other than Telstra under section 152AS of the TPA would promote the LTIE as it would promote competition in the fixed voice market (principally by the promotion of Unconditioned Local Loop Service-based competition), with flow-on competition benefits to end-users, and would promote more efficient use of and investment in infrastructure.

The ACCC found that it would promote the LTIE to grant a class exemption from the SAOs as they relate to the supply of the WLR in those Exchange Service Areas (ESAs) covered by the WLR individual exemption orders.

The ACCC also found that the class exemption should commence on the same day as Telstra’s WLR individual exemption orders. It would not promote the LTIE for the class exemption to commence any earlier than Telstra’s WLR individual exemption orders because such an outcome would undermine the rationale for granting the exemptions.

The ACCC was also of the view that the LTIE would be promoted without the imposition of conditions on the class determination. Accordingly, the class determination was not made subject to conditions.

Following review in the Australian Competition Tribunal (the Tribunal) of the ACCC’s decision to grant WLR individual exemption orders, the Tribunal decided to vary the WLR individual exemption orders.

There are two aspects of the Tribunal’s decision that are of particular relevance to the ACCC’s original WLR class exemption. The first is that the Tribunal’s decision varies the process for determining which ESAs are exempt under the WLR individual exemption orders. This is likely to result in a different exemption footprint under the Tribunal’s WLR individual exemption orders than that specified in the ACCC’s original WLR class exemption. The second is that the Tribunal’s decision changes the dates under which the WLR individual exemption comes into practical operation with the result that the dates of practical operation of the individual exemption orders and the ACCC’s original class exemption no longer align.

Variation to WLR Class Exemption Determination

The ACCC has decided to vary the WLR class exemption determination to ensure it is consistent with the Tribunal’s WLR individual exemption orders in relation to the ESAs subject to the orders and the dates of practical operation of the orders.

The ACCC’s view is that varying the class exemption in this manner ensures incentives for other potential access providers to invest in infrastructure and provide wholesale voice services are not diminished. The ACCC’s view is that such incentives promote competition and efficient investment in infrastructure. Therefore, the ACCC’s view is that the proposed variation would promote the LTIE.

The variations are set out below.

  • Item 1 varies paragraph 2 of the original class exemption determination. The expiry date is varied to be consistent with that specified in the Tribunal’s WLR individual exemption orders.
  • Item 2 varies paragraph 3 of the original class exemption determination. The definition of ‘Attachment A’ is deleted and the definition of ‘Exemption ESA List’ (adopting the same definition as that contained in the Tribunal’s WLR individual exemption orders) is inserted.
  • Item 3 deletes paragraph 6 of the original class exemption determination and inserts new paragraphs 6 and 7. This ensures the area in which the class exemption applies and when it takes practical effect are the same as the Tribunal’s WLR individual exemption orders. The new paragraph 6 adopts as the class exemption footprint the list of Exemption ESAs as published by the ACCC on its website pursuant to the WLR individual exemption orders. The new paragraph 7 provides that the class exemption does not have effect with respect to a particular ESA until 6 months after its first appearance on that list of Exemption ESAs.
  • Item 4 deletes Attachment A. This ensures the geographic area in which the class exemption applies is the same as the Tribunal’s WLR individual exemption orders.

Tribunal’s WLR individual exemption order

The Tribunal’s WLR individual exemption order as referenced in the variation instrument was made on 24 August 2009 following an application for merits review of the ACCC’s WLR individual exemption orders. The Tribunal’s WLR individual exemption order is available on the ACCC’s website at http://intranet.accc.gov.au/content/index.phtml/itemId/1085943. 

Consultation

On 14 October 2009, the ACCC published the proposed variation to the class exemption determination for public comment. The variation instrument setting out the proposed variation to the class exemption determination was published on the ACCC’s website (www.accc.gov.au) and a media release was issued. Interested stakeholders were asked to make submissions to the ACCC by 5.00pm, 23 October 2009.

The ACCC received two submissions - one from TransACT Capital Communications and one from Optus. Both submissions supported the proposed variation.

The ACCC considered the submissions in deciding to vary the class exemption determination.

Regulation Impact Statement

The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not necessary for the variations to this class exemption determination.

 

 

 

Overview

The Class Exemption (Variation) Determination No. 1 of 2009, issued by the Australian Competition and Consumer Commission (ACCC), pertains to the Trade Practices Act 1974 (TPA). This determination was enacted to adjust an existing exemption for the wholesale line rental (WLR) service, ensuring alignment with an individual exemption order made by the Australian Competition Tribunal. The WLR service is a fundamental offering that allows end-users to connect to the public switched telephone network, enabling standard voice calls and assigning a telephone number. The ACCC's decision to vary the exemption was driven by the Tribunal's alterations to the exemption orders, which affected the geographic areas and operational dates. The purpose of this variation was to maintain the incentives for investment and competition in the fixed voice market, ultimately promoting the long-term interests of end-users. The ACCC determined that the variation of the class exemption would not only align with the Tribunal's decisions but also sustain the competitive landscape by encouraging efficient infrastructure investment and service provision. By varying the exemption, the ACCC aimed to ensure that the benefits of competition and efficient use of infrastructure, originally intended by the class exemption, would continue. The variation was made following public consultation, during which stakeholders supported the proposed changes. The determination reflects the ACCC's commitment to promoting competition and infrastructure investment, consistent with the objectives of the TPA.

Scope and Application

The Class Exemption (Variation) Determination No. 1 of 2009, issued by the Australian Competition and Consumer Commission (ACCC) under Section 152AS of the Trade Practices Act 1974 (TPA), applies to carriers and carriage service providers supplying Wholesale Line Rental (WLR) services in specified Exchange Service Areas (ESAs) across Australia. The determination aims to exempt members of a specified class from certain standard access obligations (SAOs) to promote long-term interests of end-users and encourage competition in the fixed voice market. This variation aligns the class exemption with the individual exemption orders for Telstra, ensuring consistency in the geographic areas and effective dates of the exemptions. The variation was made to reflect changes decided by the Australian Competition Tribunal, and it does not impose any additional conditions beyond those already specified in the original class exemption determination. The changes include adjusting the expiry date of the class exemption to match that of the individual exemption orders, modifying the definition of the geographic areas covered, and ensuring the class exemption only takes effect six months after an ESA is listed in the exemption orders. The ACCC's decision to vary the class exemption determination was based on submissions from stakeholders, including TransACT Capital Communications and Optus, both of which supported the proposed changes.

Key Provisions

The main operative sections of the Class Exemption (Variation) Determination No. 1 of 2009 in respect of Wholesale Line Rental (WLR) under the Trade Practices Act 1974 (TPA) primarily involve the variation of an existing class exemption determination made by the Australian Competition and Consumer Commission (ACCC) in August 2008. Section 152AS of the TPA allows the ACCC to make class determinations exempting specified classes of carriers or carriage service providers from standard access obligations (SAOs). This variation aims to align the existing WLR class exemption with the WLR individual exemption order made by the Australian Competition Tribunal on 24 August 2009. The key variations include changes to the expiry date of the class exemption (item 1), the definition of the exemption areas (items 2 and 3), and the deletion of Attachment A (item 4), ensuring consistency with the Tribunal's individual exemption orders. The obligations and requirements imposed by this Act on the parties or entities it governs are primarily to ensure that the variation promotes the long-term interests of end-users of carriage services. The ACCC must be satisfied that the making of the determination will promote these interests, as defined in section 152AB of the TPA. The variation aims to maintain incentives for competition and efficient investment in infrastructure by other potential access providers. The ACCC must align the class exemption with the Tribunal's individual exemption orders, ensuring that the geographic areas and dates of practical operation are consistent. The new class exemption must also reflect the updated list of Exemption Exchange Service Areas (ESAs) as published by the ACCC on its website. The Act outlines potential civil and criminal consequences for breaches, although specific penalties are not detailed in the text. Generally, under the TPA, breaches of the standard access obligations or non-compliance with ACCC determinations can lead to various enforcement actions. These may include fines, orders for compensation, and other remedies to address the breach and its impact on end-users. The maximum penalties for breaches of the TPA can vary depending on the nature and severity of the breach, but they can include substantial financial penalties for corporations. The ACCC has the authority to take legal action against entities that fail to comply with the class exemption determination or the SAOs.

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