Trade Practices (Telecommunications Exemptions) Regulations

Overview

The Trade Practices (Telecommunications Exemptions) Regulations 1988, enacted under section 172 of the Trade Practices Act 1974, aim to address the need for specific exemptions in the telecommunications sector to facilitate new arrangements announced by the government on 25 May 1988. These regulations, issued by the Attorney-General, provide exemptions from certain sections of the Act for prescribed conduct engaged in by the Australian Telecommunications Commission (Telecom), the Overseas Telecommunications Commission (OTC), and Aussat Pty Ltd. This exemption seeks to balance the need for competition with the practicalities of transitioning to new telecommunications arrangements. The policy objective is to allow these entities to operate under certain restrictions that would otherwise be prohibited under sections 46 and 47 of the Act, which deal with anti-competitive practices and exclusive dealing, respectively. These exemptions are carefully tailored to specific policies and durations, such as Telecom's role as the sole provider of the first telephone until 30 June 1991 and its policies on standard feature telephones, PABX maintenance, and connecting small business telephone systems. The regulations also exempt Telecom, OTC, and Aussat from restrictions on shared use and resale of simple carriage of traffic over private networks, as well as certain exclusive provider policies for specific telecommunications services. Regulation 11 further limits the scope of the exemption by ensuring that prescribed authorities cannot take advantage of their power in other markets for anti-competitive purposes.

Scope and Application

The Trade Practices (Telecommunications Exemptions) Regulations 1988, made under section 172 of the Trade Practices Act 1974, provide exemptions from certain sections of the Act for prescribed conduct engaged in the course of a business by specific telecommunications entities. The Act applies to Commonwealth authorities carrying on a business, which are defined as bodies corporate established for Commonwealth purposes or incorporated companies in which the Commonwealth holds a controlling interest. This regulation exempts the Australian Telecommunications Commission (Telecom), the Overseas Telecommunications Commission (OTC), and Aussat Pty Ltd from sections 46 and 47 of the Act, which prohibit anti-competitive practices and exclusive dealing, respectively. The exemptions are limited to specific policies and durations, such as Telecom’s role as the sole provider of the first telephone until 30 June 1991, and its policies precluding competitive supply of standard feature telephones for second and subsequent telephones until 31 December 1988. Additionally, the regulation ensures that these authorities cannot use their market power for anti-competitive purposes in markets outside their primary area of operation.

Key Provisions

The Trade Practices (Telecommunications Exemptions) Regulations 1988, issued under section 172 of the Trade Practices Act 1974, provide exemptions from certain provisions of the Act for specified conduct engaged in by prescribed authorities. These authorities include the Australian Telecommunications Commission (Telecom), the Overseas Telecommunications Commission (OTC), and Aussat Pty Ltd (Aussat). Regulation 4 specifies the conduct that is exempted from sections 46 and 47 of the Act, which prohibit corporations with substantial market power from taking advantage of that power for anti-competitive purposes and engaging in exclusive dealing, respectively. The exemptions provided by these regulations primarily concern Telecom's and OTC's roles and policies in the telecommunications market. For example, Telecom is exempted from sections 46 and 47 in relation to its role as the sole provider of the first telephone until 30 June 1991 (Regulation 5), and in relation to its policies precluding the competitive supply of standard feature telephones for second and subsequent telephones until 31 December 1988 (Regulation 6). Telecom is also exempt from sections 46 and 47 regarding its PABX maintenance and servicing agreements policy until 31 December 1988 (Regulation 7), and its policy of refusing to connect small business telephone systems to its network unless supplied by Telecom until 30 June 1989 (Regulation 8). Telecom, OTC, and Aussat are exempt from sections 46 and 47 in relation to policies restricting the shared use and resale of simple carriage of all traffic over private networks where lines are leased from Telecom or OTC or services provided by Aussat (Regulation 9). Additionally, Telecom and OTC are exempt from sections 46 and 47 in relation to their roles as exclusive providers of various telecommunications services (Regulation 10). The regulations impose specific obligations and requirements on the prescribed authorities. Firstly, these authorities must adhere to the policies and conduct specified in the regulations, which are intended to facilitate the new telecommunications arrangements announced by the Government on 25 May 1988. The exemptions are time-bound, meaning the authorities can only engage in the exempted conduct during the specified periods. For instance, Telecom's exemption concerning the first telephone policy ends on 30 June 1991, and its exemption concerning the second phone policy ends on 31 December 1988. Moreover, Regulation 11 limits the scope of the exemptions by stipulating that the prescribed authorities may not take advantage of their market power for anti-competitive purposes in any market other than the one in which they have that power. Failure to comply with the provisions of the Trade Practices (Telecommunications Exemptions) Regulations 1988 can result in significant civil and criminal consequences. Under the Trade Practices Act 1974, corporations found to be in breach of sections 46 or 47 can be subject to substantial penalties. For example, corporations found guilty of engaging in anti-competitive conduct can face fines of up to $1.1 million for each contravention. Additionally, individuals involved in the breach may face personal penalties, including fines and imprisonment. It is important for the prescribed authorities to carefully adhere to the terms of the exemptions to avoid any potential legal repercussions.