The Federal Court ruled today that a competition notice issued illegally by the ACCC 18 months ago should be quashed. The Court's decision again demonstrates the fundamental flaws in the regulatory regime that open it to manipulation and gaming by Telstra's competitors.
The competition notice related to price increases made in December 2005 to two Telstra basic network access products - one a wholesale line rental service called Home Access, and the second a retail product called HomeLine Part - and about which Telstra had previously briefed the ACCC, with no resulting objection from the regulator.
Following the price increases, the ACCC issued the competition notice in April 2006 and, just four working days later, Optus commenced its own legal proceedings against Telstra on the back of the competition notice.
The Court today also rebuffed an 11th-hour attempt by the ACCC to have the Court re-write its illegal April 2006 competition notice in a way that would prevent it being quashed. Though the ACCC's rear-guard effort was unsuccessful, overall, the case exposes the way in which the existing regulatory regime can be exploited and manipulated by our competitors to Telstra's detriment.
The ACCC’s competition notice exposed Telstra to potential fines of $31 million for the first 21 days the notice was in force and up to $3 million a day thereafter, as well as third-party litigation of precisely the type commenced by Optus. The case shows that the ACCC is willing to use its powers discriminately against Telstra - even to the extent of arguing, as it did in this case, that the law doesn't require it to afford Telstra natural justice.
The Federal Court has resoundingly ruled that the common law and statutory legal rights to natural justice and procedural fairness apply and that the ACCC is obliged to respect these rights when exercising its statutory powers.
It can only be hoped that today's judgment will give the ACCC pause for thought before launching any similar ill-conceived actions. Unfortunately, the case does not change the basic machinery of the regime which allowed and encouraged regulatory gamesmanship by competitors in the first instance.
Over a two-year period we have seen the ACCC issue a "consultation notice" but fail to consult properly as required by the law it administers, follow up with a competition notice, use its coercive information-gathering powers on 10 occasions in an attempt to make a case, revoke its notice and publicly admit no further action was warranted. For its part, Optus’ proceedings against Telstra were dismissed and it was ordered to pay Telstra's costs.
All in all, an enormous waste of time and money on a competition issue that didn’t exist in the first place.
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