Bills Digest no. 66 2009–10
Trade Practices Amendment (Infrastructure Access) Bill
2009
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
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 29 October
2009
House: House of Representatives
Portfolio: Treasury
Commencement:
Sections 1 3 on the day of
Royal Assent; Schedules 1 4, items 1 11 and 13 25 of Schedule 5 on
the day after Royal Assent; and item 12 of Schedule 5 immediately
after the commencement of items 1 11 of Schedule 5.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Bill is to
amend Part IIIA of the Trade Practices Act 1974 (TPA) to
streamline administrative processes associated with the application
of the National Access Regime.
According to the Independent Committee of Inquiry into National
Competition (the Committee of Inquiry):
As a general rule, the law imposes no duty on
one firm to do business with another. The efficient operation of a
market economy relies on the general freedom of an owner of
property and/or supplier of services to choose when and with whom
to conduct business dealings and on what terms and conditions. This
is an important and fundamental principle based on notions of
private property and freedom to contract, and one not to be
disturbed lightly.[1]
Despite this acknowledgement, the Committee of Inquiry report of
August 1993 (known as the Hilmer Report after the Chairman, Fred
Hilmer) recommended the implementation of a national competition
policy for Australia to improve productivity, increase
international competitiveness and to maintain and improve living
conditions.[2]
Australia s commitment to national competition principles was
subsequently enshrined in the Competition Principles Agreement and
the Agreement to Implement the National Policy and Related Reforms
entered into between the Commonwealth, State and Territory
Governments in April 1995.[3]
Amendments to the TPA[4] which came into effect in 1995 established a new legal
regime under which firms could be given a right of access to
essential facilities [5] owned by another firm, when the provision of such a
right meets certain public interest criteria .[6] That legal regime is the National
Access Regime which is contained in Part IIIA of the TPA. Section
44DA of Part IIIA requires decisions about access regimes to be
consistent with the principles set out in the Competition
Principles Agreement.
In 2001 the Productivity Commission reviewed the National Access
Regime.[7] It
considered that (emphasis added):
Given the in principle case for some curbs on
the exercise of monopoly power in the provision of essential
infrastructure services, the limited experience in Australia with
access regimes, and ongoing structural change in a number of
infrastructure sectors, abandoning access regulation at
this stage would be inappropriate.[8]
The Productivity Commission did, however, recommend a number of
changes. The government response to the recommendations was largely
positive.[9] The
Trade Practices Amendment (National Access Regime) Act
2006 made the necessary amendments to the TPA. In particular,
the amending Act inserted statutory pricing principles to provide
guidance for pricing decisions and to contribute to consistent and
transparent regulatory outcomes over time as well as certainty for
investors and access seekers.[10]
In the same year, the Council of Australian Governments (COAG)
agreed to the Competition and Infrastructure Reform
Agreement[11] in
which all the parties agreed, amongst other things, to introduce
requirements that regulators will be bound to make regulatory
decisions under an access regime within six months, provided that
the regulator has been given sufficient information .[12]
As a further step in November 2008, COAG agreed to the National
Partnership Agreement to Deliver a Seamless National
Economy.[13]
The Hon Chris Bowen MP (the Assistant Treasurer) outlined the
further reforms to the National Access Regime arising from that
Agreement stating that:
The reforms aim to improve the efficiency,
timeliness and effectiveness of regulatory decision-making under
the Regime in Part IIIA of the [TPA].
While the Regime appears to be operating
effectively, there are concerns it is generating regulatory risks
that are hindering investment in essential infrastructure.
Some infrastructure owners and access seekers
have argued that processes under the Regime are too lengthy and
costly.
Currently, processes under the National Access
Regime can go on for years. The National Access Regime needs to be
improved to make decisions and arbitration faster.[14]
The Bill has been referred to the Economics Legislation
Committee for inquiry and report by 9 March 2010.[15]
A spokesman for Fortescue Metals Group Limited
(FMG) applauded the Government s efforts stating:
Despite favourable rulings from the National
Competition Council, the Federal Court, the Full Bench of the
Federal Court and the Full Bench of the High Court over five years,
Fortescue is still waiting to gain the right to negotiate for
access.[16]
On the other hand, Minerals Council of Australia chief executive
Mitch Hooke is reported to have said the planned amendments did not
go far enough and there was still confusion and uncertainty ,
adding that:
changes to the [Trade Practices Act] should
ensure the use of infrastructure was mandated only in circumstances
where the economic benefits of doing so unambiguously outweighed
the costs. Otherwise, future investment in critical infrastructure
could be significantly stymied.[17]
According to the Explanatory Memorandum, the Bill has no
significant financial impact on Commonwealth expenditure or revenue
.[18]
The key complaint about the National Access Regime is that it
takes too long. This is evident in the applications by Fortescue
Metals Group Limited (FMG) for declarations of access to
infrastructure owned by BHP Billiton Iron Ore Pty Ltd (BHP).
BHP carries on the business of the mining, blending and other
processing of various types of iron ore in the Pilbara region of
Western Australia for the purpose of producing bulk iron ore
products for sale. The ore is transported from mine to port via two
distinct rail lines in the Pilbara region being the Mt Newman
rail line and the Goldsworthy rail line.[19]
Subsection 44F(1) of the TPA provides that a person can request
that the National Competition Council (NCC) recommend to the
designated Minister that a particular
service be declared.[20] On 15 June 2004, FMG made an
application to the NCC under section 44F of the TPA for declaration
of a service so that it could gain access to part of the Mt Newman
rail line and part of the Goldsworthy rail line.[21]
Service is defined in section 44B of
the TPA as a service provided by means of a facility and
includes:
- the use of an infrastructure facility such as a road or rail
line
- handling or transporting things such as goods or people
- a communications service or similar service
but does not include:
- the supply of goods
- the use of intellectual property
- the use of a production process
except to the extent that it is an integral but subsidiary part
of the service. (Emphasis added.)
The NCC advised that, as a preliminary matter:
- the Mt Newman rail line service would be considered further for
declaration, but
- the Goldsworthy rail line service would not, because it was
part of a production process and therefore exempt from the
provisions of Part IIIA of the TPA.
In response, both BHP and FMG made applications to the Federal
Court under section 39B of the Judiciary Act 1903. In
essence, the action taken by BHP sought to prevent the NCC from
proceeding any further in its consideration of the application
about the Mt Newman rail line. The action taken by FMG sought
to have the NCC include the Goldsworthy line in its recommendations
to the Minister.
The NCC s final recommendation that the Mt Newman line should be
declared to be a service for a period of 20 years was provided to
the relevant Minister for a decision on 24 March 2006. As the
Minister did not publish a decision within the 60 day time limit,
under subsection 44H(9) of the TPA he was deemed to have made a
decision not to declare the service .
Even though BHP and FMG had issued proceedings in the Federal
Court in December 2004 and February 2005 respectively, the Federal
Court did not publish its decision on the matters until October
2006.[22]
The issue for the single judge of the Federal Court, Justice
Middleton, was the meaning of the terms
service and use of a
production process . These issues had been
comprehensively considered in the earlier case of Hamersley
Iron Pty Ltd v National Competition Council (Hamersley) which
provides valuable context to the FMG applications and BHP s
response.[23] In
Hamersley the issue to be determined was whether a rail
track service and associated infrastructure operated by Hamersley
Iron Pty Ltd, involved the use of a production process . Justice
Kenny considered that the term production process acted as an
exclusionary criterion within the definition of
service . Fortifying her conclusions by reference to the Hilmer
Report,[24] Justice
Kenny determined that the purpose of the exclusion was to
strike a balance, that is, to permit appropriate
utilisation of certain infrastructure by third parties and, at the
same time, protect the viability of investments made by those who
had invested in, for example, the processes of production.[25]
The application by Robe River Iron Associates to declare the
rail line operated by Hamersley a service which Robe could access,
was refused. For those in the resources sector, the
Hamersley decision acted as a disincentive to potential
applicants for access and provided some certainty to service
owners/operators about the prospects of success of any future
applications.[26]
It is likely that BHP would have commenced the relevant
proceedings feeling quite confident of the outcome, given the
decision in Hamersley. However the judge considering the
BHP and FMG proceedings determined that the Hamersley
decision was plainly wrong .[27] That being the case:
- the application by BHP in relation to the Mt Newman rail line
was dismissed, and
- the application by FMG in relation to the Goldsworthy rail line
was successful.
BHP lodged an appeal against that decision.[28] However, the majority decision
of the Full Court of the Federal Court, made in 2007, confirmed the
original decision that the bulk iron ore rail track transport
services provided by the Goldsworthy rail facility was a service
under Part IIIA of the TPA and could, therefore, be the subject of
a declaration of access.
The Productivity Commission had recognised the need for
clarification of the term production process in its 2001 report,
stating:
While the current exclusions from the coverage
of Part IIIA should be retained, developments in relation to the
production facility exemption should be monitored by the National
Competition Council. Should judicial interpretation of that
exemption lead to outcomes that detract from efficiency, it may be
necessary to remove the provision or clarify its intent.[29]
BHP lodged an appeal to the High Court against the decision of
the Full Court of the Federal Court. However, the High Court s
decision in 2008 affirmed the decision so that the judicial
interpretation of the term production process is now clear.[30]
FMG s initial applications were submitted to the NCC in June
2004. The Federal Court decisions merely considered preliminary
matters under the Judiciary Act 1903. They were not
decisions about whether access should be granted under Part IIIA of
the TPA.
In relation to the Mt Newman rail line, a
decision is deemed to have been made under subsection 44H(9) of the
TPA that the rail line not be declared a service. FMG has sought a
review of this decision by the Australian Competition Tribunal in
accordance with section 44K of the TPA. The matter is still before
the Australian Competition Tribunal and no hearing date has been
set.[31]
In relation to the Goldsworthy rail line, FMG
made a new application to the NCC on 16 November 2007 under
the name of its wholly owned subsidiary, The Pilbara Infrastructure
Pty Ltd. The NCC recommended that the application be approved on 28
August 2008. The Treasurer decided on 27 October 2008 that the
application was approved.[32] BHP lodged an appeal against the Treasurer s decision
with the Australian Competition Tribunal on 14 November
2008.[33]
Twenty-one months elapsed between the FMG applications and the
NCC recommendation to the Minister. Whilst it is acknowledged that
the FMG applications took significantly longer than most others,
the recommendation process by the NCC commonly takes months rather
than weeks. A further two months may elapse while the relevant
Minister considers the recommendation. There follows a right of
appeal to the Australian Competition Tribunal. Whilst this process
is underway, significant financial resources and personal energies
may be diverted away from the facility owner s core business, to
its ultimate detriment.
The proposed amendments in Schedule 1 of the Bill are intended
to create tighter time limits for the making of recommendations by
the NCC and decisions by the Australian Competition and Consumer
Commission (ACCC) and the Australian Competition Tribunal.
The proposed amendments in Schedule 4 of the Bill will also
streamline the process for amending access undertakings.
Five separate Federal Court judges have now turned their minds
to the meaning of the phrase the use of a production process . Each
formed a view, apparently, by considering the Hilmer Report and its
intention. In effect though, the differing approaches to decision
making by the individual judges and the varied outcomes of that
process have highlighted the very difficulties faced by the
Committee of Inquiry which stated that:
the Committee is conscious of the need to
carefully limit the circumstances in which one business is required
by law to make its facilities available to another. Failure to
provide appropriate protection to the owners of such facilities has
the potential to undermine incentives for investment.[34]
These concerns were echoed by Qantas Chairman, Leigh Clifford,
who is reported as saying:
The bottleneck at the ports ... the reality is
governments aren't going to be able to afford that. Therefore,
there has to be an incentive for the private investor to invest in
infrastructure. The problem with infrastructure is the cash flow
goes out forever and a day, and it comes back in years out We ve
got to think about how we can encourage private equity into
infrastructure, and that applies across the board - be it roads,
rail, ports.[35]
The proposed amendments in Schedule 2 of the Bill will address
this. Schedule 2 will allow a person with a material interest in a
new infrastructure facility to apply for a decision that a service
to be provided by that facility is ineligible to be a declared
service. This is based on a recommendation by the Productivity
Commission.[36] In
its 2001 report the Productivity Commission, in considering
different approaches to the problem, stated:
some form of access holiday arrangement could
be used. Most participants favoured an approach which would exempt
a new project from exposure to an access regime until it had
returned the cost of capital agreed in advance with the regulator.
Once a project had become NPV positive , any additional profits
would be shared by the facility owner and the regulator (on behalf
of service users).
The approach, which has parallels with a
resource rent tax, would have important advantages. For example, it
would provide certainty to investors [37]
The existing provisions of Part IIIA of the TPA contain target
time limits for the making of recommendations by the National
Competition Council and for making of decisions by the Australian
Competition and Consumer Commission (ACCC) and the Australian
Competition Tribunal. In each case it is expected that the
responsible body will use their best endeavours to meet those
targets.[38]
Items 2, 17, 25, 37, 49, 58 and
60 of Schedule 1 repeal existing references to
target time limits. Instead, Schedule 1 introduces the concept of
an expected period within which
recommendations or decisions are to be made.
The pattern of the proposed amendments is repeated in a number
of Divisions of Part IIIA of the TPA which are set out below. It
should be noted that Schedule 2 inserts a new Division
2AA and that Division contains time limits which are in
the same terms as those set out in Schedule 1 as outlined
below.
Items 1 16 of Schedule 1 amend Division 2 of
Part IIIA of the TPA which relates to declared services . It is the
Division on which the FMG applications were based. Existing section
44F of the TPA provides for the making of a written application to
the NCC asking that it recommend that a particular service be
declared. Item 4 inserts proposed section
44FA which will empower the NCC to give a written notice
to a person requesting specified information within a specified
period. Any information which is received within that period
must be taken into account by the NCC in making
its recommendation.
Item 5 repeals existing section 44GA and
inserts proposed section 44GA which will impose
time limits on the NCC in the making of its recommendation. In
particular, proposed subsection 44GA(2) provides
that the expected period for
consideration is 180 days. However proposed
subsection 44GA(3) does allow for
stopping the clock in which case the days which elapse are
disregarded for the purpose of calculating the consideration
period. This will occur where:
- the NCC, the applicant and the service provider make an
agreement to that effect in writing, or
- a notice is given to a person by the NCC under proposed section
44FA requesting information, in which case the days that elapse are
disregarded.
Nevertheless proposed subsection 44GA(4)
provides that the number of days disregarded must not be more than
60 days in total.
Where the NCC is not able to make its recommendation within the
expected period it must notify the designated Minister in writing.
That notice must specify how long the consideration period is to be
extended: proposed subsection 44GA(7).
Existing subsection 44H(1) provides that on receiving a
declaration recommendation, the designated Minister must either
declare the service or decide not to declare it. Existing
subsection 44H(9) provides that if the designated Minister does not
publish a decision on the declaration recommendation within 60 days
after receiving it, then he or she is taken, at the end of that
period, to have decided not to declare the service and to have
published that decision not to declare the service.
Item 7 repeals existing subsection 44H(9) and
inserts proposed subsection
44H(9). The effect of the change is that, if the
designated Minister does not publish a decision on the declaration
recommendation within 60 days after receiving it, then he or she is
taken, at the end of that period, to have made and published a
decision in accordance with the recommendation of the NCC.
Proposed subsection 44H(10) provides an exception,
so that if the designated Minister is prevented from declaring the
service, for example, because it is a service that is the subject
of an access undertaking in operation under Division 6, then at the
end of the 60 day period the designated Minister is taken to have
made and published a decision not to declare the service.
Existing section 44J provides that the NCC may recommend to the
designated Minister that a declaration be revoked. Item
9 inserts proposed subsection 44J(9)
which provides that where the designated Minister has not made a
decision on the revocation within 60 days, he or she is taken to
have made and published a decision that the declaration is
revoked.
Existing section 44K allows a provider to apply in writing to
the Australian Competition Tribunal for a review of a declaration
by the designated Minister. Similarly there is a right of review to
the Australian Competition Tribunal by the applicant for the
declaration where the designated Minister has decided not to
declare a service. Item 13 repeals existing
subsection 44K(6) and inserts proposed subsections 44K(6)
(6B) which specify that the Australian Competition
Tribunal may seek assistance or information from the NCC for the
purposes of a review. Item 16 makes similar
changes to section 44L in relation to the assistance which the
Australian Competition Tribunal may seek from the NCC in relation
to a review of a revocation decision.
States and territories are entitled to proclaim their own access
regimes for essential facilities if they wish to do so. Section 44M
of the TPA sets out the process by which states and territories can
ascertain whether or not an access regime they introduce is an
effective access regime for the purposes
of the TPA.
The practical consequence of a state or territory regime being
regarded as an effective access regime is that the NCC cannot make
a recommendation that a service be declared under Part IIIA if that
service is already the subject of an effective access regime.
In practical terms the process is as follows:
- the state or territory prepares an access regime which will
normally be given effect by specific legislation
- the regime is submitted to the NCC by the responsible state or
territory Minister
- the NCC reviews the regime in a public process by which it
seeks and considers submissions made by the state or territory as
well as by interested members of the public
- the NCC publishes a draft report and invites and considers
submissions on it
- the NCC forwards a final report to the federal Treasurer with a
recommendation on whether or not, in its opinion, the regime is an
effective one, and
- the federal Treasurer then makes a decision on the
recommendation and publishes that decision.[39]
The existing target time frame for the recommendation by the NCC
is six months from the date of the original submission.[40] The target time frame
for the decision by the Treasurer is 60 days.[41]
The NCC has made a number of access declarations in respect of
state gas, electricity and rail access regimes.[42]
Items 17 36 of Schedule 1 amend Division 2A of
Part IIIA of the TPA. Under section 44M, where a state or territory
that is a party to the Competition Principles Agreement has
established a regime for access to a service, the responsible
Minister for the state or territory may make a written application
to the NCC asking it to recommend that the Commonwealth Minister
decide that the regime for access to the service is an
effective access regime .
The Bill contains a number of amendments which are in similar
terms as the amendments to Division 2 as follows:
- item 17 inserts proposed section
44MA which empowers the NCC to request a person to provide
information of a specified nature and within a specified time to
assist it to make its recommendation. Any information which is
received in response to such a notice and within the specified time
frame, must be taken into account by the NCC
- item 27 empowers the NCC in the same terms to
request information in relation to extending a decision by the
Commonwealth Minister that a regime is an effective access
regime
- item 22 inserts proposed subsection
44N(4) so that where the Commonwealth Minister does not
publish a decision on the recommendation within 60 days, he or she
is taken to have made and published a decision in accordance with
the NCC s recommendation. Where the recommendation of the NCC was
that the access regime is an effective access
regime then the duration of deemed decision is the
same period as that recommended by the NCC
- item 30 applies in the same terms in relation
to a decision by the Commonwealth Minister to extend the period
that a regime is an effective access regime
- item 31 provides that the NCC must make a
recommendation within the expected period
for consideration, being 180 days. However proposed
subsection 44NC(3) does allow for
stopping the clock in similar terms to those detailed in item 5
above. Where the NCC is not able to make its recommendation within
the expected period it must notify the designated Minister in
writing. That notice must specify how long the consideration period
is to be extended: proposed subsection
44NC(7)
- existing section 44NE empowers the NCC to invite public
submissions on an application under Division 2A. Item
33 repeals and substitutes proposed subsection
44NE(3) so that the NCC must take into account any
information provided in public submissions within the specified
time limit in making their recommendation, and
- existing section 44O provides a right of review to the
Australian Competition Tribunal by the state or territory Minister
who made the original application or who applied to extend the
period of the effective access regime. Item 36
inserts proposed subsections 44O(5) (5B) in the
same terms as item 13 set out above in relation to the assistance
which the Australian Competition Tribunal is able to request from
the NCC.
Division 2B sets out the processes that apply to the ACCC in
making a decision to approve, or refuse to approve, a tender
process for the construction and operation of a facility that is to
be owned by the Commonwealth, or a state or territory, as a
competitive tender process. If the ACCC makes such a decision, the
NCC cannot recommend declaration of any service provided by means
of the facility and specified in the application, and the
designated Minister cannot declare any such service.
Items 37 48 of Schedule 1 amend Division 2B in
the following manner:
- the ACCC may request a person to provide information of a
specified nature and within a specified time to assist it to make
its decision about the tender process. Any information which is
received in response to such a notice and within the specified time
frame, must be taken into account by the ACCC in
making the decision: item 39
- the ACCC must make a decision within the expected
period being 90 days. However proposed
subsection 44PD(2) does allow for
stopping the clock in which case the days which elapse are
disregarded for the purpose of calculating the consideration
period. This will occur where:
- the ACCC and the applicant make an agreement to that effect in
writing or
- a notice is given to a person by the ACCC under
proposed section 44PAA requesting information
or
- a notice seeking public submissions is given by the ACCC under
proposed section 44PEA
- unlike the proposed amendments to Division 2 and 2A, the
proposed amendments to Division 2B do not set a limit on the number
of days which can be disregarded
- if the ACCC has not published its decision at the end of the
expected period (as extended by clock stoppers) it is taken to have
approved the tender process as a competitive tender process and
published a decision to that effect: item 40,
and
- existing section 44PG allows for a right of review by the
Australian Competition Tribunal in respect of the ACCC s decision.
Item 45 repeals existing subsection 44PG(5) and
inserts proposed subsections 44PG(5) (5B) in the
same terms as item 13 set out above in relation to the assistance
which the Australian Competition Tribunal is able to request from
the ACCC. Item 48 makes similar changes to section
44PH in relation to the assistance which the Australian Competition
Tribunal may seek from the ACCC in relation to a review of a
revocation decision.
Where a person seeks access to an essential service but is
unable to reach agreement on the terms and conditions of that
access with the owner or provider, he or she may apply to the ACCC
under Division 3 of Part IIIA of the TPA to have the dispute
determined by arbitration. Items 49 54 of Schedule
1 amend Division 3 as follows:
- the ACCC must make a final determination within the
expected period being 180 days. However
proposed subsection 44XA(2) does
allow for stopping the clock in certain circumstances in which case
the days which elapse are disregarded for the purpose of
calculating the determination period. However if the ACCC has not
published its final determination at the end of the expected period
(as extended by clock stoppers) it is taken to have made and
published a final determination that does not impose any
obligations on the parties or alter any obligations that exist at
that time between the parties: item 50, and
- existing section 44ZP allows for a right of review by the
Australian Competition Tribunal in respect of the ACCC s final
determination. Item 54 repeals existing subsection
44ZP(5) and inserts proposed subsections 44ZP(5)
(5B) in the same terms as item 13 set out above in
relation to the assistance which the Australian Competition
Tribunal is able to request from the ACCC for the purposes of a
review.
Section 44ZZA of the TPA enables the ACCC to
accept access undertakings from any
person who owns infrastructure to which a third party might seek
access. The advantage of using this method is that the facility
owner makes the actual undertaking about access and so has
ownership of it. Once an access undertaking has been accepted, then
the facility owner is quarantined from any attempt by a third party
to seek a declaration under Division 2.
The process to be followed by the ACCC in assessing proposed
access undertakings is essentially a public process:
- on receipt of an application the ACCC publishes the application
and seeks submissions on it
- once the submissions have been assessed the ACCC will prepare
and publish a draft decision. The ACCC often retains experts in the
particular area to assist it in its consideration of the matter.
Any one affected by the matter is entitled to make a submission on
the draft decision, and
- the ACCC considers all the submissions and makes a final
decision.[43]
The existing target time frame for the ACCC to make a decision
on an access undertaking is six months.[44]
Items 58 69 amend Division 6 as follows:
- the ACCC must make a decision on an access undertaking within
the expected period being 180 days.
However proposed subsection
44ZZBC(2) does allow for stopping the clock in
certain circumstances set out in the relevant table. Where the
clock is stopped, the days which elapse are disregarded for the
purpose of calculating the decision making period. However if the
ACCC has not published its decision at the end of the expected
period it is taken to have made and published a decision not to
accept the application: item 64
- the ACCC may request a person to provide information of a
specified nature and within a specified time to assist it to make
its decision. Any information which is received in response to such
a notice and within the specified time frame, must
be taken into account by the ACCC: proposed section
44ZZBCA, and
- existing section 44ZZBF allows for a right of review by the
Australian Competition Tribunal in respect of the ACCC s decision.
Item 69 repeals existing subsection 44ZZBF(5) and
inserts proposed subsections 44ZZBF(5) (5B) to
clarify the assistance which the Australian Competition Tribunal
may seek from the ACCC for the purposes of a review.
Item 70 inserts proposed section
44ZZOAA which limits the information to which the
Australian Competition Tribunal may have regard on review to those
documents which were taken into account by the decision maker or
those documents which were used by the NCC in forming its
recommendation.
Item 2 of Schedule 2 inserts into section 44B
of the TPA the definition of proposed
facility which is a facility that is proposed to be
constructed (but the construction of which has not started) that
will be structurally separate from any existing facility, or a
major extension of an existing facility .
Item 7 of Schedule 2 inserts proposed
Division 2AA into Part IIIA of the TPA. It introduces a
process by which the NCC can recommend to the
designated Minister [45] that a proposed
facility is ineligible to be a declared service.
The process will operate as follows:
- a person with a material interest in the service which the
proposed facility will provide may apply to the NCC asking for an
ineligibility recommendation in respect
of the service. That application must be in writing and must be
made before construction of the proposed facility commences:
proposed subsection 44LB(1)
- the NCC must then either recommend that the designated Minister
decide that:
- the service is ineligible to be a declared service and for how
long: proposed paragraph 44LB(2)(a)
- the service is not ineligible to be a declared service:
proposed paragraph 44LB(2)(b)
- there are limits on the power of the NCC so that it can only
make an ineligibility recommendation if
at least one of the matters listed in subsection 44G(2) is not
satisfied: proposed subsection 44LB(3)
- the NCC can request that a person provide further information
which is relevant to making its recommendation. The request must be
in writing and specify the time within which the information is to
be provided. Where the NCC makes such a request, any information
which is provided in compliance with the request in the time
specified must be taken into account: proposed section
44LC
- the NCC may also publish a notice inviting public submissions
on the application: proposed subsection 44LE
- the NCC must make its recommendation within the
expected period , that is, 180 days
starting on the day the application is received: proposed
subsections 44LD(1) and (2). However, proposed
subsection 44LD(3) provides for stopping, and subsequently
restarting, the clock in certain circumstances
- where the NCC is unable to make its recommendation within the
relevant period it must notify the designated Minister in writing
of the relevant reasons and specify the time within which it will
make its recommendation: proposed subsections 44LD(7) and
(8), and
- the NCC must publish its recommendation and the reasons for the
recommendation on the day the designated Minister publishes their
decision on the recommendation, or as soon as possible after that
day: proposed section 44LF.
- Once the NCC has made its recommendation, the designated
Minister must, having regard to the objects of Part IIIA of the
TPA, decide:
- whether the service is ineligible to be a declared service and
specify the period of ineligibility, being no less than 20 years:
proposed paragraph 44LG(1)(a), or
- the service is not ineligible to be a declared service:
proposed paragraph 44LG(1)(b).
In addition:
- the decision of the designated Minister must be published,
along with the reasons for the decision: proposed
subsection 44LH(1)
- where the designated Minister does not publish his or her
decision within 60 days from the day the recommendation is
received, the designated Minister is taken to have made a decision
in accordance with the ineligibility recommendation of the NCC:
proposed subsection 44LG(6). This means that if
the NCC recommended that the service be ineligible to be a declared
service for a specified period, the effect will be that the
designated Minister is deemed to have made a decision in the same
terms[46]
- proposed section 44LI provides a similar
process of recommendation by the NCC, and subsequent decision by
the designated Minister, to allow for revocation of the decision
that a service is ineligible to be a declared service. This could
occur where the facility used to provide the service is materially
different from the proposed facility described in the application
or upon request from the person who is the provider of the service,
and
- proposed sections 44LJ and 44LK provide the
mechanism for the review of ineligibility decisions and revocation
decisions respectively. The right of review is to the Australian
Competition Tribunal. Application for review must be made within 21
days after publication of the designated Minister s decision. The
Australian Competition Tribunal is empowered to affirm, vary or set
aside a decision that a service is ineligible to be a declared
service: proposed subsection 44LJ(8). The
Australian Competition Tribunal may affirm or set aside a decision
that:
- a service is not ineligible to be a declared service:
proposed subsection 44LJ(9)
- an ineligibility decision is revoked: proposed
subsection 44LK(8), or
- an ineligibility decision is not to be revoked:
proposed subsection 44LK(9).
An access undertaking is a document
which establishes the terms and conditions under which a service
provider is willing to offer or negotiate access to a service
provided by an essential facility to an access seeker. The TPA does
not prescribe the information that should be provided in an access
undertaking, although they generally deal with matters such as the
terms and conditions of access to the service; and various
obligations on the part of the provider, for example, not to hinder
access to the service, to implement a particular business
structure, to provide information to the ACCC or to comply with
decisions of the ACCC in relation to matters specified in the
undertaking.[47]
Schedule 3 amends the TPA to allow for the ACCC to accept access
undertakings with fixed principles that
will apply to any subsequent undertaking relating to that service.
The amendments do not prescribe the nature of fixed principles
although the Explanatory Memorandum provides the following
examples:
- a parameter such as an asset value
- a formula or methodology such as an efficiency benefit sharing
formula (where the service provider s net efficiency gains in
expenditure under the current access undertaking are shared between
the access provider and access seekers in any subsequent access
undertaking)
- an obligation such as the standard at which the service is to
be provided, or
- a process such as a procedure that the service provider will
follow before undertaking new investment in the relevant
facility.[48]
Item 5 of Schedule 3 inserts proposed
section 44ZZAAB into the TPA which will:
- allow for terms which are fixed
principles to be included in an access
undertaking
- the fixed principles apply for a fixed
period which will commence when the access
undertaking comes into operation (or some later time) and extend
beyond the expiry date of the undertaking so that it can be applied
to any later undertaking in respect of the same service
- empower the ACCC to reject an undertaking where it considers
that the undertaking:
- contains a term which should be a fixed principle but is
not
- contains a term which is a fixed principle but should not be,
or
- contains a fixed principle and the fixed period should be
different, and
- empower the ACCC to consent to the variation or revocation of a
fixed principle if there is no undertaking in operation.
Items 7 and 8 insert
proposed paragraphs 44ZZBF(6)(ba) and
44ZZBF(7)(ba) so that a decision to vary or revoke
a fixed principle by the ACCC is subject to review by the
Australian Competition Tribunal. Item 6 inserts
proposed subsections 44ZZBA(6) and
(7) which set out the date of effect of the ACCC s
decision to vary or revoke a fixed principle:
- if no person applies to the Australian Competition Tribunal for
review, then the decision takes effect 21 days after the making of
the decision, or
- if a person applies to the Australian Competition Tribunal for
review within 21 days, the decision comes into effect at the time
of the Australian Competition Tribunal s decision.
Items 1 and 2 of Schedule 3
are consequential amendments to the definitions of
access undertaking application and
access undertaking decision in section
44B of the TPA.
Currently, any amendment to an access undertaking requires the
proposed undertaking to be withdrawn or rejected in accordance with
existing subsection 44ZZA(7) of the TPA. The service provider must
start a new decision‑making process by submitting a new
access undertaking containing the amendments. This causes delays
and increased costs to the infrastructure provider.
Item 3 of Schedule 4 inserts proposed
section 44ZZAAA which will allow the ACCC to issue an
amendment notice in respect of an
undertaking which has been submitted to it. That amendment notice
must be in writing and specify the following:
- the nature of the amendment or amendments which the ACCC
proposes to be made
- the reasons for the proposed amendments and
- the period within which the person is to respond to the
amendment notice.
Item 2 of Schedule 4 repeals existing
subsection 44ZZA(7) and substitutes a new subsection
44ZZA(7). This will allow an infrastructure provider to
provide a revised undertaking to the ACCC in accordance with the
amendment notice rather than having to withdraw the access
undertaking and start the process again.
The ACCC must not accept the revised undertaking if the
amendments made are not the same as those proposed in the amendment
notice and do not address the reasons for those proposed
amendments. In that case it must be returned to the person within
21 days of the ACCC receiving it: proposed subsection
44ZZAAA(6). In addition, item 1 inserts
proposed subsection 44ZZA(3B) to empower the ACCC
to reject the undertaking if it incorporates amendments of a kind,
made at a time, or made in a manner that:
- unduly prejudices a person who, in the opinion of the ACCC has
a material interest in the undertaking, or
- unduly delays the process for considering the undertaking.
Where a person gives a revised undertaking in accordance with
the amendment notice, the revised undertaking is taken to be the
undertaking given for the purposes of Part IIIA of the TPA:
proposed subsection 44ZZAAA(7).
Item 1 of Schedule 5 inserts
proposed section 29LA into the TPA to allow for
the members of the NCC to make decisions via the circulation of
papers rather than at a meeting.
Existing section 44F of the TPA provides that a person may make
a written application to the NCC asking that the NCC recommend that
a particular service be declared. Item 4 inserts
proposed subsections 44F(6) (9)
allow a person to also request the NCC to vary the application at
any time before the NCC makes its decision. Under proposed
subsection 44F(9) the NCC may reject the variation if it
is of a kind, or the request is made at a time, or made in a manner
that:
- unduly prejudices a person who, in the opinion of the NCC has a
material interest in the application, or
- unduly delays the process for considering the application.
Items 5 7 amend existing section 44G which
limits the power of the NCC to recommend declaration of a service.
The effect of the amendments is that the NCC cannot recommend the
declaration of a service if a state or territory access regime has
already been certified under Division 2A of Part IIIA of the
TPA. Items 8 10 amend existing section 44H which
governs the making of a declaration by the designated Minister, in
the same terms.
Item 13 inserts proposed sections
44KA and 44KB. In its Annual Report 2007
08 the NCC expressed its belief that service providers would have
less incentive to commence a review as a means of delaying the
negotiation process if decisions were not automatically stayed by
the commencement of a review .[49] Proposed section 44KA gives
effect to this recommendation.
As a further incentive to minimise delays in the declaration
process the NCC stated:
Unlike most court proceedings there are no
provisions for costs to be paid or awarded in relation to a review
of a declaration decision by the Tribunal. (By contrast the
[National Gas Law] contains provisions for the Tribunal to award
costs in a review.) Costs provisions similar to those in the NGL
could usefully be applied for reviews of declaration decisions.
This would discourage conduct designed to waste time and provide an
additional incentive to ensure parties comply with Tribunal
directions. The Council notes that under the NGL the Tribunal must
not make an order requiring the original decision maker (including
the Council and the relevant Minister) to pay costs unless they
cause delays or otherwise act inappropriately.[50]
Proposed section 44KB will empower the
Australian Competition Tribunal to order that a person who has been
made a party to proceedings for a review of a declaration pay all
or part of the costs of another person who has been made party to
the proceedings. The designated Minister will be exempt from such
an order unless the Australian Competition Tribunal considers the
designated Minister s conduct was engaged in without regard to the
matters enumerated in proposed paragraphs 44KB(2)(a)
(d).
Under existing section 44S, once a service has been declared the
access provider and the access seeker must negotiate the terms of
the access. If the parties are not able to come to an agreement,
either party may notify the ACCC that an access dispute exists. The
access dispute is then arbitrated by the ACCC under section 44U.
Item 16 inserts proposed section
44YA which requires the ACCC to terminate an arbitration
in relation to a declared service in the event that the Australian
Competition Tribunal sets aside or varies the declaration on
review.
Item 19 inserts proposed section
44ZZCBA so that the ACCC may defer
arbitration of an access dispute where the Australian Competition
Tribunal receives an application for review of the declaration of
the service but does not make an order to stay the operation of the
declaration. However, the ACCC must defer
arbitration of an access dispute where the Australian Competition
Tribunal receives an application for review and makes a stay
order.
It is often the case that a market is dominated
by a single piece of infrastructure and some form of monopolistic
power is conferred on the firm owning the infrastructure, both in
the existing, as well as related, markets. This can occur to the
extent that the firm exhibits quite marked pricing power or where
it is uneconomic for other firms to duplicate the
infrastructure.
To balance the rights of consumers with the
infrastructure owner in such cases, Australia has developed a
national system for third party access to key economic
infrastructures. This system allows potential competitors to seek
access to infrastructure as a means to introduce competition into
affected markets.[51]
Whilst the National Access Regime, which is established by Part
IIIA of the TPA, has not been universally embraced especially by
those who have been called upon to provide access to their
infrastructure it is a fact of the Australian economic
landscape.[52] The
Bill aims, amongst other things, to improve the efficiency and the
timeliness of the decision making processes which underpin the
National Access Regime. The amendments are based on the
recommendations of the Productivity Commission and, to some extent,
on the experiences of FMG arising from their applications for
access which have been so strenuously resisted by the
infrastructure owner.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2434.
Paula Pyburne
23 November 2009
Bills Digest Service
Parliamentary Library
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