Bills Digest 89 1996-97 Trade Practices Amendment (Telecommunications) Bill 1996


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Trade Practices Amendment (Telecommunications) Bill 1996

Date Introduced: 5 December 1996
House: House of Representatives
Portfolio: Communications and the Arts
Commencement: The Act commences on the day on which it receives the Royal Assent.

Purpose

This Bill is a part of a package of Bills, the purpose of which is to implement a new regulatory framework for the telecommunications industry.Most significantly this Bill amends the Trade Practices Act 1974 by inserting 2 new parts.Part XIB:

  • defines anti-competitive conduct and, subject to certain exemptions, prohibits that conduct
  • requires carriers and carriage service providers to file tariff information and keep certain prescribed records.

Part XIC:

  • creates an access regime in respect of certain declared services
  • imposes a set of standard access obligations including a requirement to supply declared services and provide interconnection of facilities
  • facilitates the creation of a telecommunications access code
  • provides for the giving of access undertakings by carrier and carriage service providers
  • provides a mechanism for resolving disputes about access.

Background

Refer to the Background contained in the Digest of the Telecommunications Bill 1996.

Main Provisions

The substance of the Act is contained in the Schedule.The Schedule has 15 items.

Items 1 to 5 and 7 to 15

The only matter of sufficient significance to note is that it is made clear that Part XIB (see below) applies to the Crown in right of the states and territories, so far as they carry on business.

Item 6

This item amends the Trade Practices Act 1974 by the addition of Parts XIB and XIC to that Act.

Part XIB - The Telecommunications Industry: Anti-competitive Conduct and Record Keeping Rules

This Part consists of 12 divisions.

Division 1 - Introduction

This Division contains the definitions.Proposed new section 151AH is significant to the extent that it sets out the circumstances in which a substantial degree of market power is attributed to carriers and carriage service providers where a related body corporate (or an aggregation of them) has a substantial degree of power in a telecommunications market.

Division 2 - Anti-competitive Conduct

A carrier or carriage service provider is taken to engage in anti-competitive conduct where (proposed new section 151AJ):

  • it has a substantial degree of power in a telecommunications market and it takes advantage of that power with the effect or likely effect of substantially lessening competition in that or any other telecommunications market, or
  • it engages in conduct that relates to a telecommunications network and that conduct contravenes section 45 (contracts, arrangements or understandings that restrict dealings or affect competition), section 45B (the giving of covenants which may substantially lessen competition), section 46 (the misuse of substantial market power), section 47 (exclusive dealing) or section 48 (resale price maintenance) of the Trade Practices Act 1974.

A carrier or carriage service provider must not engage in anti-competitive conduct.That prohibition is known as the 'competition rule' (proposed new section 151AK).

Division 3 - Competition Notices and Exemption Orders

Competition Notices

Proposed new section 151AL allows the ACA to issue a notice stating that a specified carrier or carriage service provider has contravened or is contravening the competition rule and setting out details of the contravention.That notice is called a "competition notice".

A competition notice is prima facie evidence of the matters in the notice in any proceedings under Part XIB (proposed new section 151AN).

The ACCC must formulate guidelines in respect of the issue of competition notices and it must have regard to those guidelines when deciding whether to issue a notice (proposed new section 151AP).

Exemption Orders

Proposed new section 151AS allows a person to apply to the ACCC for an order exempting specified conduct from the scope ofthe definition of anti-competitive conduct.The ACCC must publicise the receipt of such an application in such manner as it thinks fit (proposed new section 151AW).

The ACCC may refuse to consider an application for an exemption order if it has already received an application under Division 1 of Part VII (i.e. an application for authorisation to engage in certain anti-competitive conduct) or a notice under section 93 (i.e. a notice of intention to engage in certain conduct) (proposed new sections 151AX and 151AY).

Before making an exemption order, the ACCC must give the applicant and any other person whom the ACCC considered interested a reasonable opportunity to make submissions (proposed new section 151BB).

Before making an order, the ACCC must be satisfied that:

  • the conduct will result in a benefit to the public and that benefit outweighs the detriment to the public resulting from any lessening of competition, or
  • the conduct is not anti-competitive conduct.

When determining whether it is satisfied as to these matter, the ACCC may consider:

  • the extent to which the conduct relates to the supply of goods or services on favourable terms to a financially disadvantaged individual, an individual disadvantaged on health grounds, a non-profit community organisation or charitable organisation, an educational institution or health facility
  • the extent to which the conduct relates to the supply of goods or services on favourable terms for community, charitable or educational purposes or the promotion of health or safety
  • the need to supply any universal service obligation
  • the extent to which the conduct is likely to prevent or reduce environmental degradation
  • the extent to which the conduct contributes to technical innovation by Australian industry (proposed new section 151BC).

Division 4 - Tariff Filing

The ACCC may direct a carrier or carriage service provider, who has a substantial degree of power in a telecommunications market, to provide it with specified information about:

  • charges for goods and services specified in the direction
  • new charges, variations of charges and cessation of charges for goods and services specified in the direction, at least 7 days before and at such period after the imposition, variation or cessation as is specified in the direction.

Such a direction is called a 'tariff filing direction' (proposed new section 151BK).

If the ACCC gives a tariff filing direction to a person, it must give the person a notice setting out the reasons for the direction (proposed new section 151BM).

The ACCC is empowered to make publicly available information given to it as a result of the issue of a tariff filing direction where it is satisfied that:

  • the disclosure would result in a benefit to the public, and
  • that benefit would outweigh the detriment constituted by any lessening of competition as a result of the disclosure and any substantial prejudice to the commercial interests of persons that would occur as a result of the disclosure.

The ACCC must notify the provider of the information that it intends to make the information publicly available (proposed new section 151BQ).The provider of the information is entitled to apply for a review of the decision to disclose the information.The application is made to the Australian Competition Tribunal under proposed new section 151CI.

Division 5 - Record-keeping Rules

The ACCC may make rules (know as 'record keeping rules') requiring one or more specified carriers or carriage service providers to keep records containing information relevant to (proposed new section 151BU):

  • ascertaining whether there has been compliance with the competition rules and tariff filing directions
  • the performance of a function or exercise of a power by the ACCC under Part XIB or Part XIC (dealing with access - see below)
  • the performance of a function or exercise of a power by the ACCC under certain provisions of the Telecommunications Act 1996 and the Telstra Corporation Act 1991.

Division 6 - Enforcement of the Competition Rule, Tariff Filing Directions and Record-keeping Rules

Proposed new section 151BX provides that if the Federal Court is satisfied that a person has contravened the competition rule, a tariff filing direction or a record-keeping rule (or has attempted to do so or has been involved in a contravention) the Court may impose a pecuniary penalty of up to:

  • in the case of a corporation,

a) for contravention of the competition rule, the sum of $10 million plus $1 million for each day the contravention continued

b) for contravention of a tariff filing direction, $10 million for each contravention

c) for contravention of a record-keeping rule, $250,000 for each contravention.

  • in the case of an individual,

a) for contravention of a record-keeping rule, $50,000 for each contravention

b) for contravention of the competition rule or a tariff filing direction, $500,000 for each contravention.

A person (i.e. corporation or individual) is not liable for more than 1 pecuniary penalty in respect of the same conduct.

The ACCC may commence proceedings for the recovery of a pecuniary penalty referred to above, however, proceedings for recovery of a penalty for contravention of a competition rule cannot be commenced unless a competition notice was in force in respect of the conduct at the time it occurred (proposed new section 151BY).

Proposed new section 151CA empowers the Federal Court to grant an injunction where it is satisfied a person has engaged or is proposing to engage in a contravention of the competition rule, a tariff filing direction or a record-keeping rule (or has attempted to do so, or has aided or abetted etc.).

Where a competition notice is in force and a person suffers loss or damage by conduct of another person which is dealt with in the notice the first person may recover the amount of that loss or damage from the other person.Such an action must be commenced within 3 years after the date on which the cause of action accrued (proposed new section 151CC).

Division 7 - Disclosure of Documents by Commission

This is an administrative provision obliging the ACCC to provide copies of documents in relation to exemption orders (see above) and proceedings under Division 6, on request to certain persons (Proposed new section 151CG).

Division 8 - Treatment of Partnerships

Proposed new section 151CH makes 2 minor changes to this provisions of the Part in respect of their application to partnerships, i.e. the partnership is treated as comprised of individual persons.

Division 9 - Review of Decisions

Decisions to refuse applications for or revoke exemption orders and decisions to publicly disclose information received as a result of a tariff filing direction are subject to review by the Australian Competition Tribunal (ACT) (proposed new section 151CI).

Applications for review in respect of exemption orders must be made within 21 days of the decision.Applications for review in respect of the public disclosure of tariff information must be made within 7 days of the decision.

Division 10 - Reviews of Competitive Safeguards within the Telecommunications Industry

Each financial year the ACCC must review and report to the Minister on competitive safeguards within the telecommunications industry.The Minister must cause a copy of the report to be laid before each House of Parliament within 15 sitting days of the House after receiving the report (proposed new section 151CL).

Division 11 - Monitoring of Telecommunications Charges Paid by Consumers

The ACCC must monitor and report to the Minister each financial year on charges paid by consumers for listed carriage services (as defined by the Telecommunications Act 1996) and goods and services for use with listed carriage services (proposed new section 151CM).

Division 12 - Review of Operation of this Part

The Minister must cause a review of the operation of this Part to be made before 1 July 2000.Copies of the report must be laid before each House of Parliament within 15 sitting days after the completion of the preparation of the report (proposed new section 151CN).

In conducting the review, consideration must be given to the question of whether any or all of the provisions of this Part should be repealed or amended.

Part XIC - Telecommunications Access Regime

This Part consists of 11 divisions.

Division 1 - Introduction

The object of the Part is to promote the long-term interests of end-users of carriage services or of services provided by means of carriage services (proposed new section 152AB).In determining whether a thing promotes the long-term interests of end-users regard must be had to only the following objectives:

  • promoting competition in markets for listed services
  • achieving any-to-any connectivity (i.e. the ability of each end-user to communicate with another end-user who is supplied with the same or similar service, whether or not the end-users are connected to the same telecommunications network)
  • encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which listed services are supplied.

'Access' refers to access by a service provider in order that the service provider can provide carriage services and/or content services (proposed new section 152AF).

The ACCC may declare a specified body or association to be the Telecommunications Access Forum (TAF) provided:

  • the membership of the body or association is open to all carriers and carriage service providers
  • the body or association is capable of generating recommendations relating to declared services and a draft telecommunications access code
  • the body or association has a written constitution.

Division 2 - Declared Services

The ACCC may declare that a specified service is a 'declared service' if:

  • the declaration is in accordance with a recommendation of the TAF, and
  • the ACCC is satisfied that the TAF has given access seekers and consumers a reasonable opportunity to comment on the proposal to make the recommendation,

or,

  • the ACCC has held a public inquiry (and prepared a report about the inquiry which was published no more than 180 days before the making of the declaration) about the proposal to make the declaration, and
  • the ACCC is satisfied that the making of the declaration will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services (proposed new section 152AL).

The ACCC may hold a public inquiry on its own initiative or if requested to do so by a person (proposed new section 152AM).

Division 3 - Standard Access Obligations

Proposed new section 152AR sets out the 'standard access obligations'.It provides that a carrier or carriage service provider who supplies a declared service is an 'access provider'.A declared service which is supplied by a carrier or carriage service provider is an 'active declared service'.

What are the Standard Access Obligations?

  • If requested to do so by a service provider, an access provider must supply an active declared service.An access provider is relieved from that obligation if complying with it would result in:

1) preventing the access provider or a service provider who already has access to the declared service from obtaining a sufficient amount of service to meet its anticipated requirements

2) preventing a person from obtaining a sufficient level of access to the declared service to be able to meet the person's requirements

3) depriving any person of a protected contractual right (i.e. a right under a contract in force at the beginning of 13 September 1996).

  • Access providers must permit the interconnection of their facilities with the facilities of the service provider for the purpose of enabling the service provider to be supplied with the active declared services.
  • Access providers must provide billing information to the service provider in connection the supply of the active declared services.The timing and manner and form in which that information is given must be in accordance with the regulations.

The ACCC has the power to make both class and individual exemptions for carriers and carriage service providers in respect of the obligations under proposed new section 152AR (proposed new sections 152AS and 152AT).An exemption must not be made unless the ACCC is satisfied that the making of the exemption will promote the long-term interests of end-users of carriage services.If the making of the exemption is likely to have a material effect on the interests of a person, then it must first publish the proposal and consider submissions.

A person whose interests are affected by a decision in respect of an individual exemption may apply for review of the decision by the Australian Competition Tribunal.

Carriers and carriage service providers must comply with the obligations imposed by this Part on such terms and conditions as are agreed and failing agreement:

  • the terms and conditions of any access undertaking (see below) given by the carrier or carriage service provider where the undertaking specifies terms and conditions in relation to the matter
  • otherwise, on such terms and conditions as are determined by the ACCC as arbitrator (proposed new section 152AY).

Carrier licences are subject to a condition that the carrier must comply with any standard access obligations that are applicable to the carrier (proposed new section 152AZ).

If the Federal Court is satisfied that a carrier or carriage service provider has contravened any of the standard access obligations, the Court may make an order directing compliance and/or requiring the payment of compensation.

Division 4 - Telecommunications Access Code

TAF Telecommunications Access Code

The TAF may submit a draft Telecommunication Access Code to the ACCC for approval.The code must set out model terms and conditions relating to compliance with the standard access obligations that are capable of being adopted by access undertakings (proposed new sections 152BC, 152BD and 152BE).

Before approving a draft TAF Telecommunications Access Code the ACCC must:

  • be satisfied that:

a) the TAF has consulted with consumers and persons likely to become access seekers in relation to declared services covered by the code

b) the code is consistent with the standard access obligations

c) if any part of the code deals with pricing, the code is consistent with any Ministerial pricing determination, and

d) each set of model terms and conditions is reasonable (proposed new section 152BF)

  • invite and consider public submissions (proposed new section 152BH), and
  • consult with the Australian Communications Authority (proposed new section 152BI).

An approved code is know as an 'approved TAF telecommunications access code'.

ACCC Telecommunications Access Code

If a TAF Telecommunications Access Code is in force at any time and the ACCC becomes dissatisfied with the code, the ACCC may request the TAF to vary the code or to submit a fresh draft code.If the TAF fails to comply with the request or the variation or fresh code are not satisfactory, the ACCC may revoke the current code and make a new one.

Similarly, if no approved TAF telecommunications access code is in force at a particular time, the ACCC may give notice to the TAF requesting it to submit a draft TAF telecommunications access code.If the TAF does not comply with the request or the draft code is not satisfactory, the ACCC may make a telecommunications access code (proposed new section 152BJ).

A code made by the ACCC is known as an "ACCC telecommunications access code".

Division 5 - Access Undertakings

An 'access undertaking' is a written undertaking given by a carrier or carriage service provider to the ACCC under which the carrier or provider undertakes to comply with the terms and conditions specified in the undertaking in relation to the applicable standard access obligations.

The terms and conditions of the undertaking may be specified in the undertaking or may be specified by adopting a set of model terms and conditions set out in the approved TAF telecommunications access code.

Where an undertaking adopts a model set of terms and conditions set out in an approved TAF telecommunications access code, the ACCC must accept the undertaking.Where the undertaking does not adopt a set of model terms and conditions set out in an approved TAF telecommunications access code, the ACCC may accept or reject the access undertaking.The ACCC must reject the undertaking unless:

  • the ACCC has published the undertaking and invited and considered submissions
  • the ACCC is satisfied that the undertaking is consistent with the standard access obligations applicable to the carrier or provider
  • if the undertaking deals with pricing, it is consistent with any Ministerial pricing determination
  • the ACCC is satisfied the terms and conditions of the undertaking are reasonable, and
  • the expiry time of the undertaking is within 3 years of it coming in operation (proposed new section 152BV).

A decision by the ACCC to accept or reject an access undertaking (or a variation of an access undertaking) is subject to review by the Australian Competition Tribunal on the application of a person whose interests are affected by the decision (proposed new section 152CE).

The ACCC or any person whose interests are affected may apply to the Federal Court if it thinks that a carrier or provider has breached an access undertaking.The Federal Court may make an order directing compliance and/or directing the carrier or provider to compensate any person who has suffered loss or damage as a result of the breach (proposed new section 152CD).

Division 6 - Ministerial Pricing Determinations

The Minister may make a written determination (called a "Ministerial pricing determination") setting out principles dealing with price-related terms and conditions relating to the standard access obligations (proposed new section 152CH).

Division 7 - Relationship between this Part and Part IIIA

Part IIIA of the Trade Practices Act 1974 deals with access to services.At least to a certain extent Part XIC is a specific 'version' of that access regime as it applies to telecommunications.

Section 44S of the Trade Practices Act 1974 provides that if a third party and service provider are unable to agree on an aspect of access to a declared service, either party may notify the ACCC that an access dispute exists.The dispute is then arbitrated by the ACCC.

Proposed new section 152CK of the Bill provides that a notification must not be given under section 44S if the dispute relates to an aspect of a declared service within the meaning of this Part.

Section 44ZZA allows the ACCC to accept undertakings from providers as to the terms and conditions on which they are prepared to provide access to services.Proposed new section 152CK provides that the ACCC must not accept such an undertaking when it relates to a declared service within the meaning of this Part.

If an undertaking under section 44ZZA is in operation in relation to a particular service and that service becomes a declared services, the undertaking ceases to be in operation to the extent to which it sets out terms and conditions relating to the provision of access to one or more services providers.

Division 8 - Resolution of Disputes about Access

Notification of Access Disputes

If:

  • a declared services is supplied by a carrier or carriage service provider, and
  • one or more standard access obligations apply in relation to the declared service, and
  • the access seeker is unable to agree with the carrier or carriage service provider about the terms and conditions on which the carrier or provider is to comply with those obligations or they are unable to agree about one or more aspects of access to the declared service,

then either party may notify the ACCC that an access dispute exists (proposed new section 152CM). Arbitration of Access Disputes

Proposed new section 152CP obliges the ACCC to make a determination on access (unless the ACCC terminates the arbitration).

When making a determination, the ACCC must take into account:

  • whether the determination will promote the long-term interests of end-users of carriage services
  • the legitimate business interests of the carrier or provider and the carrier or provider's investment in facilities used to supply the declared services
  • the interest of all persons who have rights to use the declared service
  • the direct costs of providing access to the declared service
  • the economically efficient operation of a carriage service, a telecommunications network or a facility, and
  • any other matters the ACCC thinks are relevant (proposed new section 152CR).

The ACCC has the power to terminate an arbitration if, amongst other things, it thinks the notification of the dispute was vexatious, the subject matter is trivial or a party to the arbitration has not engaged in negotiations in good faith (proposed new section 152CS).

If the ACCC suspects a person has not engaged in negotiations in good faith, it may direct the person to do or refrain from doing a specified thing relating to the conduct of the negotiations (proposed new section 152CT).Ifa person contravenes such a direction, the Federal Court may order the payment of a pecuniary penalty as the Court determines to be appropriate (maximum $250,000 for a corporation per contravention - $50,000 for an individual per contravention) (proposed new section 152CU).The ACCC is empowered to institute proceedings for the recovery of a pecuniary penalty.

Procedure in Arbitrations

For the purposes of an arbitration, the ACCC is to be constituted by 2 or more members of the ACCC (as nominated by the Chairperson) (proposed new section 152CV).

The arbitration is to be held in private (proposed new section 152CZ).

The parties may appear in person or be represented by someone else (proposed new section 152DA).

In an arbitration hearing, the ACCC is not bound by the rules of evidence (proposed new section 152DB).

A determination has effect 21 days after it is made.

Review of Determinations

A party to a determination can apply to the Australian Competition Tribunal for review of a determination (proposed new section 152DO).The application must be made within 21 days of the determination being made.

A party to a determination can appeal to the Federal Court on a question of law from a decision of the Australian Competition Tribunal (proposed new section 152DQ).

The fact that an appeal is instituted to the Federal Court does not affect the operation of the decision of the Tribunal.However, the Court may make any order staying or otherwise affecting the decision (proposed new section 152DR).

Enforcement of Determinations

If the Federal Court is satisfied that a party has engaged or proposes to engage in conduct in contravention of a determination, it may make an order granting an injunction or requiring the payment of compensation.

Division 9 - Registered Agreements for Access to Declared Services

Proposed new section 152ED provides for registration of agreements for access to declared services.The consequence of registration is that a party to the agreement may enforce it under Division 8 as if it were a determination of the ACCC under proposed section 152CP.

Division 10 - Hindering Access to Declared Services

Carrier, carriage service providers and persons to whom declared services are provided must not prevent or hinder access by a service provider to declared services (proposed new section 152EF).If the Federal Court is satisfied that a person has engaged or proposes to engage in conduct in contravention of that prohibition, it may make an order granting an injunction or requiring the payment of compensation (proposed new section 152EG).

Division 11 - Miscellaneous

This Part contains clarifying provisions in respect of partnerships and conduct by directors, servants and agents.

Contact Officer and Copyright Details

Lee Jones
5 February 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
© Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 10 April 1997


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