Government to scrap telco-specific competition laws

Communications minister Senator Mitch Fifield has announced that the government will push ahead with the repeal of laws intended to prevent anti-competitive conduct in the telco sector.

Fifield announced today that the government would make changes to Divisions 2 and 3 of Part XIB of the Competition and Consumer Act 2010 (CCA).

Under Division 2 a telco is considered guilty of anti-competitive conduct if it has substantial degree of power in a telecommunications market and either “takes advantage of that power in that or any other market with the effect, or likely effect, of substantially lessening competition in that or any other telecommunications market” or “takes advantage of that power in that or any other market, and engages in other conduct on one or more occasions, with the combined effect, or likely combined effect, of substantially lessening competition in that or any other telecommunications market.”

Division 3 allows applications to the Australian Competition and Consumer Commission (ACCC) for exemptions from the regime if there is a public benefit that outweighs the anti-competitive impact.

The Competition Policy Review (Harper Review) recommended Section 46 of the CCA should be re-framed to “prohibit a corporation that has a substantial degree of power in a market from engaging in conduct if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market”

Amending Section 46 would “obviate the need for the telecommunications industry-specific anti-competitive conduct provisions,” stated the final report of the review, released in March 2015.

The government argues that moves to strengthen the general misuse of market power law in Section 46 of the CCA and changes in the telco market since 1997, when Part XIB was introduced, render the telco-specific provisions unnecessary.

“The government is confident that broader competition law will be effective in preventing anti-competitive conduct in the telecommunications sector,” a statement issued by Fifield said.

“In addition, the ACCC continues to have several other regulatory mechanisms available under the access regime in Part XIC of the same Act and Telstra structural separation arrangements to address issues that may arise.”

In a submission to a government consultation on the proposed changes, the ACCC said that although “market power concerns still remain in the telecommunications sector”, the view of the competition watchdog was that “the proposed amendments to section 46 are likely to be an effective tool for dealing with any associated competition concerns”.

The ACCC enforces the provisions of the act and under Part XIB can issue a notice to a telco directing them to stop engaging in anti-competitive conduct and potentially commence legal action against them.

Removing duplication in competition law was backed by the Australian Communications Consumer Action Network (ACCAN). However the advocacy group said that the ability for the ACCC to issue competition notices “to intervene quickly and effectively to protect consumers from anti-competitive market behaviour” should be retained.

ACCAN was not alone in some of its concerns about amendments to the act. Optus, for example, has argued that Part XIB should be retained because the “specific competition regime recognises that the communications industry has unique features that limit the effectiveness of general economic competition provisions”.

“Optus does not believe that any further changes are required to Part XIB as it is currently constructed,” it argued in a submission to the government’s consultation on the changes.

“This means that the current competition notice and exemption order powers would remain unchanged. Optus sees no valid reason to amend these long-standing features of Part XIB.”

Vodafone also urged caution with changes to the CCA. Telecommunications-specific anti-competitive conduct laws “are an essential feature of the regulation of the Australian telecommunications sector,” the telco argued.