EXPLANATORY STATEMENT
Statutory Rules of 1988 No. 203
Issued by the Authority of the Attorney-General
Trade Practices (Telecommunications Exemptions) Regulations (Amendment)
Subsection 172(1) of the Trade Practices Act 1974 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed, or are necessary or convenient to be prescribed.
Paragraph 172(2)(c) of the Act provides that the regulations may exempt from provisions of the Act conduct engaged in in the course of a business carried on by the Commonwealth or a Commonwealth authority.
Section 46 prohibits the misuse of market power for a predatory purpose specified in subsection 46(1). Section 47 prohibits the practice of “exclusive dealing”, which includes supplying goods on condition that the acquirer obtains goods from another person.
The Trade Practices (Telecommunications Exemptions) Regulations (the Principal Regulations) exempt a range of activities engaged in by the Government’s telecommunications authorities - Australian Telecommunications Commission (Telecom), Overseas Telecommunications Commission and Aussat Pty Ltd - from the operation of sections 46 and 47 of the Act.
Regulation 5 of the Principal Regulations exempts from sections 46 and 47 of the Act, until 30 June 1989, Telecom’s requirement that any subscriber acquiring a telephone service shall have connected to that service a “standard” telephone supplied by Telecom. The effect of the exemption is to enable Telecom to impose this requirement without contravening the Act. Regulation 2 amends the expiry date for that exemption to 30 June 1991. The earlier date was a drafting error.
Subsection 45(2) prohibits the making of, or giving effect to, agreements establishing primary boycotts involving competition (for example, collective refusals by competitors to deal with another party) or substantially lessening competition. The effect of subsection 45(6) is that conduct that would, but for that subsection, constitute a contravention of sections 45 and section 47 shall not constitute a contravention of subsection 45(2).
The Principal Regulations do not expressly provide that the relevant conduct exempted from the operation of section 47 should also be exempt from subsection 45(2).
On one view of the effect of the Principal Regulations, the exemption of the relevant conduct from the operation of section 47 may have had the unintended effect of removing the protection from subsection 45(2) for which provision is made in subsection 45(6). In order to clarify the matter, regulations 3 and 4 expressly provide that relevant conduct exempted from the operation of section 47 by the Principal Regulations does not contravene subsection 45(2) of the Act.
Overview
The Trade Practices (Telecommunications Exemptions) Regulations (Amendment) 1988 were issued under the authority of the Australian Parliament to address specific regulatory gaps in the Trade Practices Act 1974. This legislative amendment was necessary to correct a drafting error in the original regulations that prematurely terminated an exemption related to telecommunications services provided by the Australian Telecommunications Commission (Telecom). Furthermore, the amendment aimed to clarify the scope of exemptions granted to telecommunications authorities, ensuring that certain business practices were appropriately shielded from specific prohibitions in the Act, particularly concerning market power misuse, exclusive dealing, and agreements that substantially lessen competition. The objective of these regulations is to provide explicit protection to exempted conduct, thereby preventing any unintended legal consequences that might arise from ambiguous regulatory language.
Scope and Application
The Trade Practices (Telecommunications Exemptions) Regulations (Amendment) Statutory Rules of 1988 No. 203 amend the Trade Practices (Telecommunications Exemptions) Regulations to correct and clarify certain exemptions granted under the Trade Practices Act 1974. These regulations specifically apply to the operations of the Commonwealth’s telecommunications authorities, including the Australian Telecommunications Commission, Overseas Telecommunications Commission, and Aussat Pty Ltd. By virtue of these regulations, certain conduct engaged in by these entities in the course of their business is exempted from certain provisions of the Trade Practices Act, including prohibitions on misuse of market power for predatory purposes, exclusive dealing practices, and agreements that establish primary boycotts or substantially lessen competition. Regulation 2 corrects an error by extending the exemption period for Telecom’s requirement that subscribers acquire a “standard” telephone until 30 June 1991. Regulations 3 and 4 ensure that conduct exempted from the operation of section 47 of the Act also remains exempt from subsection 45(2), thereby maintaining the intended protections against certain anti-competitive practices. These regulations have a national reach and apply across Australia, ensuring that the telecommunications authorities can operate without contravening the specified sections of the Trade Practices Act.
Key Provisions
The Trade Practices (Telecommunications Exemptions) Regulations (Amendment) 1988 (the Amendment) provides specific amendments to the Trade Practices (Telecommunications Exemptions) Regulations (the Principal Regulations). Section 46 of the Trade Practices Act 1974 (the Act) prohibits the misuse of market power for a predatory purpose, while Section 47 prohibits the practice of “exclusive dealing”. The Principal Regulations exempt certain activities of telecommunications authorities from these provisions, and the Amendment modifies these exemptions. For instance, Regulation 2 corrects an error by extending the exemption period for Telecom’s requirement of a “standard” telephone connection until 30 June 1991 (s. 2). Additionally, Regulations 3 and 4 clarify that conduct exempted from Section 47 is also exempt from the prohibitions of subsection 45(2) of the Act, which prevents agreements that substantially lessen competition (ss. 3-4).
The Amendment imposes specific obligations on telecommunications authorities, such as Telecom, Overseas Telecommunications Commission, and Aussat Pty Ltd. These entities must adhere to the amended exemption periods and conditions as outlined in the regulations. For instance, Telecom is required to ensure that any subscriber acquiring a telephone service connects to that service a “standard” telephone supplied by Telecom until the corrected date of 30 June 1991 (s. 2). Furthermore, these authorities must ensure their conduct does not contravene the Act, even though they are exempt under the Principal Regulations and the Amendment. This includes making sure their activities do not establish primary boycotts or substantially lessen competition, as outlined in subsections 45(2) and 45(6) of the Act.
Failure to comply with the provisions of the Trade Practices Act 1974 or the Trade Practices (Telecommunications Exemptions) Regulations (Amendment) can result in significant legal consequences. For instance, contravening Section 46 or Section 47 of the Act can result in penalties for misuse of market power or exclusive dealing practices. Under the Act, corporations can be fined up to $1.1 million, while individuals can face fines up to $220,000 (s. 12GA(1)). Additionally, engaging in conduct that contravenes subsection 45(2) can result in fines for corporations up to $10 million and individuals up to $2 million (s. 12GB). The Amendment ensures that the exemptions provided are clearly understood and adhered to, thereby mitigating the risk of unintended breaches and associated penalties.