Stuart Corner
Friday, 02 March 2007 07:13
Opinion and Analysis
Page 1 of 3
In December 2005 Telstra created consternation amongst its wholesale telephony service customers by rejigging its line rental pricing so that they were paying more for the service than Telstra, in most cases, was charging its retail customers. Or so its competitors alleged.
That practice continued until April while the ACCC investigated these allegations, and agreed that they were true. It slapped a competition notice on Telstra stating:
"The price increase resulted in Telstra's retail prices for the line rental component for the majority of its fixed voice products being below Telstra's wholesale price for line rental. The ACCC considers the effect or likely effect of Telstra's pricing conduct includes: hindering Telstra's retail competitors from competing for certain types of customers; reducing the incentives of Telstra's retail competitors to compete for new or existing customers; reducing the ability of Telstra's retail competitors to expand product offerings and invest in infrastructure." Serious stuff.
The ACC went on to say: "The competition notice allows third parties to take action to seek to recover loss or damage for certain anti-competitive conduct that occurs while the notice is in force. It also provides various options for the resolution of the ACCC's competition concerns. Further action by the ACCC will depend on a number of factors, including the outcome of the continuing investigation as well as any action taken by Telstra in response to the notice."
Telstra's response was to take no action whatsoever. Optus took up the opportunity to launch a legal challenge to Telstra, as well as one under section 46 of the Trade Practices Act, which did not require a competition notice. The ACCC could have pursued Telstra through the courts and if successful could have succeeded in getting a $3 million per day fine imposed on Telstra for every day up to a year for which the conduct continued.
