Thursday, 25 November 2010
Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010
I do have an explanation of how section 51 authorisation provisions in the bill will work. I will take the time now to respond to your question. Section 51 of the Competition and Consumer Act, currently the Trade Practices Act, provides that in determining whether a person has contravened part IV of that act certain matters must be disregarded, including anything specified in and specifically authorised by an act. So proposed section 577BA specifies and specifically authorises certain conduct for the purposes of section 51. These authorisation provisions are required due to the agreement that was reached between Telstra and NBN Co., as you well know, and the implementation of that agreement will provide for the progressive migration of services from Telstra’s copper and hybrid fibre coaxial cable networks to the National Broadband Network.
The purpose of authorising certain conduct under that agreement is that there could be scope for such an agreement to involve conduct by the two parties that could be argued to lessen competition when it is considered in isolation of the overall structural reforms delivered by the agreement. Therefore, in light of the role of the ACCC to consider the competitive impacts of the arrangements as part of its scrutiny of Telstra’s structural separation undertaking, the bill authorises the entering into of the agreement and associated conduct in the event that the ACCC accepts the undertaking. This will remove any need for a separate authorisation inquiry while still ensuring appropriate scrutiny by the ACCC of the agreement between Telstra and NBN Co., as set out in Telstra’s structural separation undertaking.
Under proposed sections 577BA(2) the bill authorises the giving by Telstra to the ACCC of a structural separation undertaking, a variation to a structural separation undertaking, a draft migration plan or a variation to a final migration plan. Furthermore, to allow for early preparatory work to commence in carrying out this historic structural reform of the telecommunications industry, the provisions under the proposed section 577BA also authorise certain matters before a structural separation undertaking comes into force. Please note, these are specifically proposed subsections 577BA(3), which provide that where Telstra and NBN Co. enter into a contract, arrangement or understanding prior to a structural separation undertaking coming into force, and the operative provisions in the agreement are subject to the condition precedent of a structural separation undertaking coming into force, then the entering into of that agreement by Telstra and NBN Co. is authorised. And if a written copy of the agreement was given to the ACCC by Telstra or NBN Co. before the ACCC had accepted the structural separation undertaking then conduct engaged in by Telstra and NBN Co. to give effect to that agreement is authorised after the structural separation undertaking has come into force.
Importantly, the requirement for the contract to be given to the ACCC—and I know this is specifically your area of concern and I think we have now addressed it—will allow the ACCC to scrutinise the agreements between Telstra and NBN Co. before the ACCC decides whether to accept the structural separation undertaking. Proposed subsections 577BA(4) and (5) also authorise certain matters before a structural separation undertaking comes into force. For the sake of completion I will continue, because these are specifically sections that provide that where Telstra and NBN Co. enter into a contract, arrangement or understanding prior to a structural separation undertaking coming into force and ‘the contract, arrangement or understanding contains a migration provision’, then the entering into of those agreements is authorised to the extent that the contract contains the migration provision and conduct engaged in by Telstra or NBN Co. in order to give effect to the migration provision is authorised unless the structural separation undertaking has been rejected by the ACCC or the structural separation undertaking has been accepted subject to the occurrence within a specified period of specified events and that period has ended without the structural separation undertaking coming into force.
It is important, I think, to clarify that a migration provision, which is defined under proposed subsection 577BA(11), relates to Telstra ceasing to supply services on its copper network or commencing to supply services on the NBN. In the situation where Telstra never lodges a structural separation undertaking, the authorisation of certain conduct will cease when an in-force functional separation undertaking is in place. This is set out under proposed paragraph 577BA(5)(g). This means that the authorisation will not continue once it is clear that Telstra is not proceeding with its structural separation undertaking. Once the ACCC has scrutinised and accepted Telstra’s structural separation undertaking and, if applicable, its migration plan and these arrangements have come into force, the legislation authorises certain conduct performed in order to comply with those documents.
Proposed subsection 577BA(6) and (10) authorise conduct engaged in by Telstra in order to comply with an in-force structural separation undertaking or an in-force migration plan. In addition, the acquisition of an asset by Telstra by a person specified by Telstra in an in-force structural separation undertaking is authorised under proposed subsection 577BA (7), where disposal of that asset is required in order for Telstra to comply with its structural separation undertaking. I trust you are following all of this, Senator Joyce. Where Telstra and NBN Co. enter into a contract, arrangement or understanding in order that Telstra complies with an in-force structural separation undertaking then under proposed subsection 577BA (8) the entering into of that contract, arrangement or understanding is authorised and conduct engaged in by Telstra or NBN Co. to give effect to that contract, arrangement or understanding is authorised.
For further clarity, under subsection 577BA (9) the minister is also empowered to determine by legislative instrument that the entering into of a particular contract, arrangement or understanding between Telstra and NBN Co. was required in order for Telstra to comply with an in-force structural separation undertaking. The purpose of this subsection is to provide certainty to both Telstra and NBN Co. by providing a mechanism for the minister to ensure that a contract falls within the scope of that authorisation. However, the minister’s determination under subsection (9) is a legislative instrument, so each house of the parliament can disallow the minister’s authorisation of the contract. This provides for appropriate parliamentary scrutiny of the minister’s exercise of this power.
Structural reform of the telecommunications sector, as we all know, is in the national interest, and these provisions take into account the ACCC’s role in considering the competitive impacts of the arrangements between Telstra and NBN Co. while also giving Telstra and NBN Co. the necessary certainty to move ahead with the agreed arrangements. I therefore hope, Senator Joyce, that this detailed response to your question, which is about clarity on the operation of section 577BA, satisfies your query and puts your mind at rest that there is nothing in this act that is cause for concern. The specificity of the provisions have now been outlined for your benefit. If you have any further questions, that is fine, but I think the detailed explanation has now been provided.