Use it or lose it – Government to repeal Competition Notice regime for anti-competitive conduct in the telecommunications sector - Trade Regulation & Practices

The Federal Government recently announced that legislation will be introduced to repeal the telecommunications-specific anti-competitive conduct laws contained in Part XIB of the Competition and Consumer Act 2010 (Cth) (CCA).

This announcement follows the release of the Exposure Draft of the Competition and Consumer Amendment (Competition Policy Review) Bill 2016 (Exposure Draft) in September which, among other things, proposes to expand the scope of the general misuse of market power law in section 46 of the CCA.

Part XIB was intended to supplement section 46 by increasing the ability of the ACCC to respond quickly to evidence of anti-competitive conduct in telecommunications markets. The Part XIB regime enables the ACCC to issue a competition notice where it has reason to believe that anti-competitive conduct has occurred. Substantial penalties will apply if a court subsequently finds that this is the case. However, since the introduction of Part XIB in 1997, the ACCC has only issued five Part A competition notices (all of which were later revoked).

The last Part A competition notice was issued in 2006 in relation to a Telstra wholesale line rental price increase. The increase resulted in some retail prices for the line rental component of its fixed voice products being below the wholesale price. However, Telstra successfully challenged the notice on procedural grounds. The Federal Court held that the ACCC was not entitled to issue the notice as:

the earlier consultation notice which it had issued differed from the competition notice in terms of the anti-competitive conduct it described; and
as Telstra was not given a reasonable opportunity to comment or to change its conduct to avoid the issue of the competition notice, it was denied procedural fairness.¹

The case demonstrated the challenges associated with a regulator exercising quasi-judicial powers under Part XIB. Even though the requirement to issue a consultation notice was subsequently removed by the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, the ACCC has not issued another competition notice since.

The repeal of Part XIB will resolve the inconsistency that would otherwise arise between section 46 and the competition rule in section 151AK if, as is likely, the Exposure Draft's removal of the "take advantage" element of section 46 is implemented.

The Federal Government announced that it is confident that the broader competition law will be effective in preventing anti-competitive conduct in the telecommunications sector. While it is certainly true that the amendments proposed to section 46 of the CCA would substantially increase its scope, it also appears that the Federal Government is less concerned about competition in telecommunications markets as Telstra progressively structurally separates and migrates its fixed line services to the nbn" Network.

While it has been rarely used, the repeal of Part XIB will arguably amount to a significant shift away from direct regulatory action by the ACCC to a stronger reliance upon the courts to enforce the competition law in the telecommunications sector.

Footnotes

¹ Telstra Corporation Limited v Australian Competition and Consumer Commission (No 2) [2007] FCA 493.

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