Telstra launches legal challenge to ACCC's competition notice

Stuart Corner
Monday, 01 May 2006 12:25

IT Policy - Regulation

See also:
ACCC slaps competition notice on Telstra
Telstra refutes competition notice

Telstra has launched a legal challenge to the Australian Competition and Consumer Commission (ACCC) over the competition notice served on it last month for allegedly overcharging wholesale customers for line rentals. Telstra has accused the ACCC of "failure to follow the proper process required by law" 

Telstra says the ACCC has rejected its request to provide the reasons for issuing the Competition Notice. "The ACCC also failed to voluntarily withdraw the Competition Notice, as previously requested by Telstra, after Telstra pointed out problems with both the notice and the process followed in issuing it," Telstra said, and it promised to "vigorously contest vigorously the validity of the Competition Notice."

Telstra's general manager, regulatory affairs, Dr Tony Warren, claimed that the Competition Notice raised arguments that were different from those contained in the ACCC's earlier Consultation Notice, making the regulator's conduct both unfair and unauthorised by law.

According to Telstra, the Competition Notice relates only to a subset of 'low spend' customers, whereas the Consultation Notice related to the entire customer base. "The law requires the ACCC to give Telstra an opportunity to consider its entire legal case and put its submissions to the ACCC. In its Competition Notice, the ACCC has shifted the goalposts to cover the different category of 'low spend' customers alone," Warren said.

The competition notice states specifically that the line rental price increase "has had the effect or likely effect of substantially lessening, preventing or hindering competition in the retail fixed voice service market in one or more of the following respects: by substantially preventing or hindering Telstra's retail competitors from competing for lower spend customers in the retail fixed voice service market as such customers cannot be supplied at a price which enables Telstra's rivals to recover the full cost of supplying the fixed voice service."

Warren claimed that "Telstra is the only carrier in Australia that offers packages targeted at low income customers and pensioners. We accept this social responsibility. But Telstra is not a magic pudding that must also be forced to subsidise its competitors so they can serve these customers at a profit."