Telstra scores court win over ACCC

Stuart Corner
Thursday, 05 April 2007 19:09

IT Policy - Regulation

On this at least the ACCC and Telstra are in agreement. The ACCC said: "In April 2006, the ACCC issued a competition notice which provided some information that was not in the consultation notice...The ACCC considered that the differences between the consultation notice and competition notice were not substantial, but rather provided particularisation and focusing of the allegations...However, the Court found that the ACCC was not entitled to issue the competition notice because it differed from the consultation notice in respect of only two matters held to be of substance. The Court also found that because Telstra was not given details of those matters when the ACCC consulted with it, that Telstra was not afforded the opportunity to address relevant issues."

The ACCC in its press release also stated: "Telstra challenged the validity of the competition and consultation notices on a wide variety of grounds...Justice Bennett dismissed the large majority of Telstra's complaints..."

Telstra also argued that the judgement vindicated its claim that it had not engaged in any anti-competitive conduct. "The judgement follows the ACCC’s withdrawal of the competition notice last month because it couldn’t support its allegations against Telstra, despite using its coercive information-gathering powers on ten occasions over 16 months...It has been 16 months since the price changes [that triggered the issue of the competition notice] and there is no evidence of an anti-competitive effect in the market."

That may or may not be true but the fact is that the Justice Bennett has not ruled either way on this.

Telstras' other conclusion is also flawed. It states that "This case demonstrates it’s simply too easy for the ACCC to dash out a competition notice, exposing Telstra to potential fines mounting at $3 million a day, as a form of bureaucratic bullying."

Quite the opposite, in fact. If you read the chronology in Telstra's press release it details extensive requests by the ACCC for information from Telstra, and if you read the actual competition notice, it is very detailed. Yet despite all this, the ACCC blew it.

Clearly the issuing of a competition notice that can withstand a determined demolition job is a very difficult task indeed. And this bodes ill for a regulator attempting to reign in a large and powerful player bent on anti-competitive conduct.

As the ACCC said: "This [judgment] may delay or frustrate the ACCC's ability to respond quickly to potential anti-competitive conduct. It may also provide the recipient of a notice with incentives to challenge procedural aspects instead of addressing the substantive underlying conduct."