Trade Practices Act 1974 - Determination under section 152AQA (28/11/2007)

Administered by Department of Communications and the Arts

Legislation au F2007L04882 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

Pricing Principles for the Domestic Mobile Terminating Access Service

Trade Practices Act 1974

 

Legislative Provisions

 

On 30 June 2004, the Domestic Mobile Terminating Access Service (MTAS) for voice services terminating on all digital mobile telecommunications networks was declared by the Australian Competition and Consumer Commission (the ACCC) under section 152AL of the Trade Practices Act 1974 (the Act).

 

Subsection 152AQA(1) of the Act provides that the ACCC must, by writing, determine principles relating to the price of access to a declared service. Subsection 152AQA(2) of the Act provides that the determination may also contain price-related terms and conditions relating to access to the declared service.  The price-related terms and conditions are typically referred to as “indicative prices”.

 

Subsection 152AQA(6) of the Act provides that the ACCC must have regard to the determination if it is required to arbitrate an access dispute under Division 8 of the Act in relation to the declared service.  However, the pricing principles are not binding on the ACCC. Parties to arbitrations are still able to address the ACCC on the relevance and applicability of the pricing principles to the circumstances of their particular dispute.

 

The Determination of Pricing Principles for the Domestic Mobile Terminating Access Service is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Purpose

 

The purpose of the Determination is to inform industry, government and other interested parties of the principles and price-related terms and conditions that are likely to guide the ACCC when considering an access dispute or assessing an undertaking in relation to pricing for the MTAS.

 

The ACCC considers that the Determination will guide commercial negotiation of access by providing greater certainty regarding the ACCC’s views on reasonable access prices.

 

Background

 

The MTAS is a wholesale input, used by providers of fixed-to-mobile and mobile-to-mobile calls, to allow their customers to call mobile subscribers. It allows consumers (either fixed-line or mobile) to call mobile users. If a call made by the carrier's customer terminates on another mobile network, then the carrier pays the other network owner for the mobile termination access service.

 

The ACCC declared the MTAS on 30 June 2004. The ACCC’s declaration decision is set out in its report Mobile Services Review - Mobile Terminating Access Service – Final Decision, published in June 2004.  The report is available on the ACCC’s website at www.accc.gov.au. That same report also contained the ACCC’s consideration of the appropriate pricing principles for the declared MTAS in Chapter 8 and indicative price-related terms and conditions in Chapter 9.

 

On 30 June 2004, the same time the MTAS was declared, the ACCC also issued a determination under section 152AQA of the Act outlining the principles relating to the price of access to the MTAS and the adjustment path which the price of the MTAS should follow over the period 1 July 2004 to 30 June 2007. That determination expired on 30 June 2007. The declaration for the MTAS does not expire until 30 June 2009.

 

In June 2007, the ACCC released the Draft MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report and a draft determination under section 152AQA of the Act.  The ACCC sought submissions on the Report and the draft determination to apply to the period from 1 July 2007 to 31 December 2008.  

 

As result of the inquiry, the ACCC made the Determination under section 152AQA relevant for the period 1 July 2007 to 31 December 2008.  The ACCC’s analysis regarding the pricing principles and indicative prices that are to apply to the MTAS is set out in Chapter 3 and 1 respectively of the ACCC’s report MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report, published in November 2007.

 

Regulation Impact Statement

 

The ACCC has obtained the advice of the Office of Best Practice Regulation (formerly the Office of Regulation Review) that a Regulation Impact Statement is not required for the Determination.

 

Consultation

 

Before making a pricing principles determination, the ACCC is required under subsection 152AQA(4) to publish a draft determination, invite people to make submissions and consider any submissions received within the specified time limit.

 

In June 2007, the ACCC released the Draft MTAS Pricing Principles Determination (Draft PPD) relevant for 1 July 2007 to 31 December 2008 for public comment. The draft PPD was published on the ACCC’s website www.accc.gov.au and submissions from interested parties were sought at that time. 

 

The ACCC has taken submissions into account in making the Determination. A discussion of the submissions received by ACCC in relation to the Draft PPD is set out in the ACCC’s report MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report, published in November 2007. 

 

Commencement of Determination

 

The Determination commences on the day it is made.

 


Notes on the Determination

 

 

The ACCC’s principles relating to the price of access to the declared MTAS are set out in Part 1 of Schedule 1 of the Determination. 

 

The ACCC’s price-related terms and conditions relating to access to the declared MTAS are set out in Part 2 of Schedule 1 of the Determination.

Overview

The Trade Practices Act 1974 was enacted by the Australian Parliament to promote fair competition and to protect consumers and businesses from anti-competitive practices. Among its provisions, the Act empowers the Australian Competition and Consumer Commission (ACCC) to declare certain services as significant markets, thereby subjecting them to additional regulatory scrutiny. In 2004, the Domestic Mobile Terminating Access Service (MTAS) for voice services was declared by the ACCC under section 152AL of the Act, recognising the critical role this service plays in the telecommunications sector. The subsequent determination of pricing principles for the MTAS, as outlined in the legislative instrument F2007L04882, aims to provide clarity and guidance on reasonable access prices for this service, thereby facilitating fair competition and protecting consumer interests within the telecommunications market. The policy objective is to ensure that the ACCC’s views on pricing are transparent and accessible to industry participants, government, and other stakeholders, thereby promoting informed commercial negotiations and informed decision-making.

Scope and Application

The Pricing Principles for the Domestic Mobile Terminating Access Service (MTAS) outlined in F2007L04882 apply to entities involved in providing or using the MTAS, which is a service that allows fixed-line or mobile users to call mobile subscribers. This legislation is a legislative instrument under the Trade Practices Act 1974 and pertains to the Australian Competition and Consumer Commission's (ACCC) determination of pricing principles for the declared MTAS, effective from 1 July 2007 to 31 December 2008. The purpose of this Determination is to provide clarity and guidance to industry, government, and other stakeholders regarding the principles and price-related terms and conditions that the ACCC will consider when assessing access disputes or pricing undertakings for the MTAS. The principles and indicative prices outlined in this Determination aim to facilitate commercial negotiations by establishing a framework of reasonable access prices. While the pricing principles are not binding on the ACCC, they must be considered by the ACCC in arbitrations related to the MTAS. The scope of this legislation is national, as it applies across Australia, and it extends to all entities involved in the provision or use of the MTAS. The ACCC must consider submissions from interested parties before making a final determination, as mandated under the Trade Practices Act 1974.

Key Provisions

The main operative sections of the Determination of Pricing Principles for the Domestic Mobile Terminating Access Service are set out in Part 1 and Part 2 of Schedule 1. Section 152AQA(1) of the Trade Practices Act 1974 (the Act) mandates that the Australian Competition and Consumer Commission (ACCC) must determine principles relating to the price of access to a declared service. This is further elaborated in section 152AQA(2) of the Act, which allows for the inclusion of price-related terms and conditions, often referred to as "indicative prices." Section 152AQA(6) stipulates that the ACCC must consider these determinations when arbitrating access disputes. It is important to note that while the ACCC must have regard to these pricing principles, they are not binding on the ACCC itself. Parties involved in arbitrations can still challenge the relevance and applicability of these principles to their specific circumstances. The Determination imposes several obligations and requirements on the parties governed by it. Firstly, it obligates the ACCC to publish draft determinations, invite public submissions, and consider these submissions before finalizing the determination. This process is mandated by subsection 152AQA(4) of the Act. Secondly, the Determination requires telecommunications companies and other relevant entities to align their pricing strategies with the principles and indicative prices outlined in the document. This alignment is intended to ensure that the pricing of mobile terminating access services is fair and reasonable. Lastly, the Determination necessitates that the ACCC consider the outlined principles and indicative prices when arbitrating disputes related to access to the declared mobile terminating access service. Breaching the obligations set forth in the Determination can result in various consequences. While the Determination itself does not explicitly outline specific penalties, the Trade Practices Act 1974 provides a framework for addressing breaches. Under the Act, failure to comply with the ACCC's determinations or indicative prices could potentially be treated as an anti-competitive practice, which may lead to enforcement actions by the ACCC. Such actions could include court proceedings, where the court may issue orders for compliance or impose fines. Additionally, if the breach results in misleading or deceptive conduct, the entity in breach may face penalties under sections 18 and 23 of the Act. The maximum penalties for such breaches can include substantial fines, with the exact amount determined by the court based on the severity and impact of the breach.

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