Application by Chime Communications Pty Ltd (No 2) [2009] ACompT 2

ADMINISTRATIVE LAW – Judicial review – distinction between questions of fact and questions of law – whether ordinary or non-legal technical meaning of word is question of fact – limitation on the power of supervising court – whether a supervising court can direct an administrative body as to what meaning it should apply to a non-legal technical word


EVIDENCE – Tribunal limited to review on information, documents and evidence before the ACCC – whether the Tribunal may have regard to its own expertise

TRADE PRACTICES – Telecommunications access regime – application for review – declared services – the local call service and the wholesale line rental service – application for exemption from standard access obligations – comparing the “future with” and “future without” the exemption orders – whether exemption orders will promote the “long-term interests of end-users” – meaning of “competition”, “market power”, “barriers to entry” and “economic efficiency” – conditions and limitations imposed on exemption orders

Telecommunications Competition Act 2002 (Cth), Sch 2 Pt 11 Item 66

Trade Practices Act 1965 (Cth), s 10

Trade Practices Act 1974 (Cth), Pt XIC; ss 7, 152AB, 152AR, 152AT, 152ATA, 152AW(4)

Trade Practices Amendment Act 1977 (Cth), s 21

Restrictive Trade Practices Act 1971 (Cth), s 8(1)(a)

Application by Chime Communications Pty Ltd [2008] ACompT 4

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

Boral Besser Masonry Limited v Australia Competition and Consumer Commission (2003) 215 CLR 374

Bryer v Metropolitan Water Sewerage and Drainage Board (1939) 56 WN (NSW) 169

Church of Scientology Inc v Woodward (1982) 154 CLR 25

Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389

Cozens v Brutus [1973] AC 854

Craig v The State of South Australia (1995) 184 CLR 163

J & H Timbers Proprietary Limited v Nelson (1972) 126 CLR 625

Keller v Drainage Tribunal and Montague [1980] VR 449

Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60

Midwestern Machinery Co v Northwest Airlines, Inc 392F3d 265, 282 (8th Cir, 2004)

Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559

Minister for Immigration and Multicultural Affairs v Epeabaka (1999) 84 FCR 411

Norbis v Norbis (1986) 161 CLR 513

NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509

Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company (1989) 167 CLR 177

Roads Corporation v Dacakis [1995] 2 VR 508

R v Milk Board [1944] VR 187

Seven Network Limited (No 4), Re [2004] ACompT 11

Sinclair v Mining Warden at Maryborough (1975) 132 CLR 473

Sydney International Airport, Re [2000] ACompT 1

Telstra Corporation Limited v Australian Competition Tribunal [2009] FCAFC 23

Telstra Corporation Limited (No 3), Re [2007] ACompT 3



Areeda, P E , Solow, J L and Hovenkamp, H, Antitrust Law  (3rd ed, 2007)

Bain, J S, Barriers to New Competition (1956)

Baumol, W J, Panzar, J C, and Willig, R D, Contestable Markets and the Theory of Industry Structure (1982)

Baumol, W J, Panzar, J C, and Willig, R D, ‘Pricing issues in the deregulation of railroad rates’ in J Fisinger (ed), Economic Analysis of Regulated Markets (1983)

Bork, R, The Antitrust Paradox: A Policy at War With Itself (1978)

Brock, W A, ‘Contestable Markets and the Theory of Industry Structure:  A Review Article’ (1983) 91 J Pol Econ 1055

Carlton, D W, and Perloff, J M, Modern Industrial Organization (4th ed 2004)

Cave, M, ‘Encouraging infrastructure competition via the ladder of investment’ (2006) 30 Telecommunications Policy 223

Clark, J M, ‘Toward a Concept of Workable Competition’ (1940) 30 American Econ Rev 241

Geroski, P, Gilbert, R J, and Jacquemin, A, Barriers to Entry and Strategic Competition (1990)

Gilbert, R J, ‘The Role of Potential Competition in Industrial Organization’ (1989) 3 J Econ Persp 107

Hay, G A, ‘Market Power in Antitrust’ (1992) 60 Antitrust LJ 807

Hovenkamp, H, Federal Antitrust Policy The Laws of Competition And Its Practice (3rd ed, 2005)

Hurdle, G, et al, ‘Concentration, Potential Entry, and Performance in the Airline Industry’ (1989) 38 J Indus Econ 2

Lander, W M, and Posner, R A, ‘Market Power in Anti-Trust Cases’ (1981) 94 Harv L Rev 937

Mason, E S, ‘Price and production policies of large-scale enterprise’ (1939) 29(1) American Econ Rev 61

Morrison, S A, and Winston, C, ‘Empirical Implications and Tests of the Contestability Hypothesis’ (1987) 30 JL & Econ 53

Peltzman, S, ‘The Gains and Losses from Industrial Concentration’ (1977) 20 Journal of Law and Economics 229

Scherer, F M , Industrial Market Structure and Economic Performance (1970)

Scherer, F M , Ross, D, Industrial Market Structure and Economic Performance (3rd ed, 1990)

Schmalensee, R L, ‘Ease of Entry:  Has the Concept Been Applied Too Readily?’ (1987) 56 Antitrust LJ 43

Schwartz, M ‘The Nature and Scope of Contestability Theory’ (1986) 38 Oxford Econ Papers 37

Sharpe, T, ‘Trying to make sense of abuse of a dominant position’ in C Robinson (ed), Regulating Utilities and Promoting Competition (2006)

Shepherd, W G, ‘“Contestability” v Competition’(1984) 74 American Econ Rev 572

Shepherd, W G, The Economics of Industrial Organization (4th ed, 1997) 38.

Sosnick, S H, ‘A Critique of Concepts of Workable Competition’ (1958) 72 Quarterly Journal of Economics 380

Spence, A M, ‘Contestable Markets and the Theory of Industry Structure:  A Review Article’ (1983) 21 J Econ Lit 981

Stigler, G, ‘Introduction’ in Business Concentration and Price Policy (1955)

Stiglitz, J E, ‘Technological Change, Sunk Costs and Competition’ in 3 Brookings papers on Econ Activity (1987)

Sullivan, L A, and Grimes, W S, The Law of Antitrust (2000) 59

Viscusi, W K , Vernon, J M and Harrington Jr, J E, Economics of Regulation and Antitrust (4th ed, 2005)







File No 2 of 2008







Justice Finkelstein (President),

R Davey,

Professor D Round


27 MAY 2009




File No 2 of 2008








R Davey

Professor D Round



27 MAY 2009





1 Introduction

1              The usual objective of access legislation in western countries is to promote competition so as to enhance both economic efficiency and consumer welfare.  It is widely recognised that a competitive market achieves allocative efficiency where economic resources are allocated in such a way that it is not possible to make anyone better off without making someone else worse off; productive efficiency where goods and services are produced at the lowest possible cost; and dynamic efficiency where industry develops new and better production techniques and products.  In simple terms, competition is viewed as the force that leads to efficiency and monopoly is condemned by many for distorting it.  

1.1 Part XIC of the Trade Practices Act

2              Part XIC of the Trade Practices Act 1974 (Cth) establishes a regime for access to telecommunications services.  The object of Part XIC is expressed to be the promotion of the “long-term interests of end-users of carriage services or of services provided by means of carriage services” (listed services):  s 152AB(1).  If it is in the long-term interests of end-users, a telecommunications service may be declared under s 152AL and the carrier must provide access to that service in accordance with the standard access obligations mentioned in s 152AR.  Conversely, if it is in the long-term interests of end-users an order may be made under s 152AT exempting a carrier from the  standard access obligations.

3              Both the decision to grant access (that is, to declare an eligible service to be a declared service) and to exempt a person from the obligation to provide access to a declared service requires the decision-maker (the Australian Competition and Consumer Commission (the ACCC) and on review the Australian Competition Tribunal (the Tribunal)) to be “satisfied” that the grant or exemption (as the case may be) is in the long-term interests of end-users having regard to “the extent to which [the grant or exemption] is likely to result in the achievement” of the objective of promoting competition, achieving any-to-any connectivity and encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which listed services are supplied and are likely to become capable of being supplied:  s 152AB(2).  If the decision-maker is unable to reach that state of satisfaction the relevant decision cannot be made.  

1.2 The applications

4              In this case Telstra seeks to be exempted from the standard access obligations in respect of two declared services, the wholesale line rental (WLR) service and the local carriage service (LCS).  It seeks those exemptions in respect of the area serviced by any exchange in which a competitor of Telstra (a service provider) has installed at or near the exchange the necessary infrastructure (such as a digital subscriber line access multiplexer (DSLAM) or multi-service access node (MSAN)) to use another service (the unconditioned local loop service (the ULLS)).  The resolution of Telstra’s application raises important issues that will, to a greater or lesser extent, govern how future exemption applications will be dealt with.  For that reason it is important for the Tribunal to explain how it would normally approach such applications. 

2 The Tribunal’s approach

5              The place to begin is with the regulator.  Both the ACCC and the Tribunal are bodies some of whose members are people with knowledge of, or experience in, industry, commerce and economics.  When the Tribunal was first established in 1965 (then under the name Trade Practices Tribunal) a presidential member was required to be a barrister or solicitor and any other member had “to be qualified for appointment by virtue of his knowledge of, or experience in, industry, commerce or public administration”:  Trade Practices Act 1965 (Cth), s 10.  The qualification for presidential members was changed by the Restrictive Trade Practices Act 1971 (Cth) so that a presidential member is now required to be a judge of a Federal Court:  Restrictive Trade Practices Act 1971, s 8(1)(a).  The qualification for other members was changed in 1977 to add to those qualifications a member with knowledge of, or experience in, “economics” and “law”:  see Trade Practices Amendment Act 1977 (Cth), s 21, amending Trade Practices Act 1974, s 31.  The qualification for membership of the ACCC is substantially the same:  Trade Practices Act 1974, s7. 

6              The qualification requirement is very important.  In requiring qualifications for appointment Parliament has assumed that the members will bring to bear their particular experience and knowledge when performing their functions.  The reason is obvious.  Each of the ACCC and the Tribunal perform highly specialised tasks.  In the absence of appropriately qualified members who can make use of their knowledge and experience in the areas which qualified them for appointment, neither the ACCC nor the Tribunal could carry out its functions effectively. 

7              Let us illustrate the point by reference to the present applications.  The applications raise several important issues regarding the subject of industrial organisation economics.  Unless the decision-maker (the ACCC or the Tribunal) can bring to bear its knowledge of economics when analysing those issues there is the very real risk that its decision would miscarry.  It is for this reason that courts have held that a member of a specialised tribunal is entitled to use his or her experience in interpreting and weighing the material and in reaching conclusions on technical matters:  see for example Keller v Drainage Tribunal and Montague [1980] VR 449, 453; R v Milk Board [1944] VR 187; Bryer v Metropolitan Water Sewerage and Drainage Board (1939) 56 WN (NSW) 169 cited with approval in J & H Timbers Proprietary Limited v Nelson (1972) 126 CLR 625, 634.

8              In this respect the function of a specialist tribunal is different from that of a judge.  Judges must decide cases based on the facts that have been tendered in evidence.  The judge is an expert in the law and will rely on that expertise in deciding a case.  In addition, a judge may use extrinsic material as a source of ideas.  Examples include decisions from foreign jurisdictions, writings by the legal academy, standard reference works from particular disciplines and the writings of authors from those disciplines.  For present purposes reference may be made to decisions in of the High Court in competition cases.  In both Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company (1989) 167 CLR 177 and Boral Besser Masonry Limited v Australia Competition and Consumer Commission (2003) 215 CLR 374 most of the judges made extensive reference to standard economics textbooks and papers published by leading economics commentators for purposes of understanding applicable economic principles, for shaping their views and for assistance in reaching their conclusions. 

9              The Tribunal, however, is better placed than a judge.  It has no need to go to external material to inform itself of, for example, principles of industrial organisation, although those principles may go to the very heart of an issue before it.  The reason the Tribunal has no need to look to extrinsic material is that some of its members were appointed because they possess knowledge of those principles. 

10            True it is that it may be necessary, as in these applications, to go to texts and papers for purposes of recording precisely how a principle was developed, an argument was put, or a model structured.  But that is merely to bring to the Tribunal’s mind with precision that which some of its members, by their training and experience, know.

11            In reaching the conclusion that the Tribunal may have regard to its own expertise, we have not overlooked s 152AW(4).  In its present form that subsection was introduced in 2002 by the Telecommunications Competition Act 2002 (Cth), Sch 2 Pt 11 Item 66.  Initially s 152AW(4) had provided that for the purposes of a review the Tribunal may have regard to any information, documents and evidence before the ACCC.  Now the subsection provides that for the purposes of a review the Tribunal may only have regard to “any information given, documents produced or evidence given to the [ACCC] in connection with the making of the decision to which the review relates” together with any other information referred to in the ACCC’s reasons.  The Tribunal does not regard this subsection as inhibiting its capacity to make use of its knowledge and experience if its knowledge and experience will assist it in arriving at a decision.  The Explanatory Memorandum to the Telecommunications Competition Bill 2002, which introduced s 152AW(4) in its present form, makes it plain that its purpose is to make sure an applicant (and, presumably, any other party) “... will not be able to put information, documents or evidence to the [Tribunal] for consideration in reviewing the decision … that was not first put before the ACCC ...”.  It is evident from the limited purpose of s 152AW(4) that the section cannot be used to subvert the intention of Parliament to allow members of the Tribunal to make use of their expertise, an intention which has been in the legislation since 1965.  Perhaps the provision prohibits the Tribunal from having regard to external sources for new information (see eg Re Seven Network Limited (No 4) [2004] ACompT 11 at [140] – [148]).  Whether the section goes that far can be decided another day.

12            The second point to note in relation to the Tribunal’s approach is that an exemption order can only be made if the decision-maker is “satisfied” the decision will “promote” the long-term interests of end-users having regard to “the extent to which” the decision “is likely to result in the achievement of” the three objectives mentioned in s 152AB(2).  This involves a comparison of what is sometimes called the “factual” or the “future with” (ie the likely state of affairs if the exemption order is made), with the “counterfactual” or the “future without” (ie the likely state of affairs if the exemption order is not made).  The investigation of each situation (the factual and counterfactual) is forward looking and is, therefore, hypothetical and, necessarily, incapable of precise assessment. 

13            The task of deciding what is likely to happen in the future is not simply a matter of guesswork.  Logically the first step is to examine the existing state of affairs as regards the three objectives:  promoting competition, achieving any-to-any connectivity and encouraging economic efficiencies.  While the course of the future is not predictable with certainty the chance that an event will occur, or that a particular situation will arise, is estimable, at least in ordinal terms.  Moreover, while past events are not a certain guide to the future, their evaluation is a necessary, if not integral, step in determining what is likely to happen in the future: see Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559, 574 – 575; Minister for Immigration and Multicultural Affairs v Epeabaka (1999) 84 FCR 411, 419.  This is particularly so in the “future without” analysis as the status quo is often a useful guide as to what is likely to happen in the future.  An investigation of the existing state of affairs necessarily involves an analysis of empirical data.  That is to say, good analysis is “empirically based and robust” and bad analysis is “a priori and untested by evidence”:  T Sharpe, ‘Trying to make sense of abuse of a dominant position’ in C Robinson (ed), Regulating Utilities and Promoting Competition (2006) 139.  

14            An analysis of what may happen in the “future with” and the “future without” cannot be based on empirical data for the future, for that data does not exist.  The process of deciding what is likely to happen in the future may be assisted by the application of an appropriate model that has been developed for predicting behaviour in particular circumstances.  Most models seek to show a link between an existing state of affairs (based on assumptions derived from observation of the past or present) and a particular forecast outcome.

2.1 Long-term interests of end-users

15            The Tribunal has in the past discussed what is involved in reaching the required degree of satisfaction that an order will promote the long-term interests of end-users.  In Re Seven Network Limited (No 4) the Tribunal said (at [119]) that the required “degree of satisfaction is reached by applying the future with and the future without test, that is to say we compare the future situation with the exemption orders having been made with the future situation without the exemption orders having been made. We then ask the question: which situation is in the [long-term interests of end-users]”.  The Tribunal also discussed (at [120]) the meaning of “end-users” (they include actual and potential end-users), “interests” (the interests of end-users in obtaining lower prices than would otherwise be the case, increased quality of service and increased diversity and scope in product offerings) and “long-term” (the period over which the full effects of the Tribunal’s decision will be felt).

16            As regards the three objectives in s 152AB(2) the Tribunal has in the past explained what it understands by the notions of “promoting” competition and “encouraging” infrastructure investment.  As regards promoting competition the Tribunal refers to what it said in Re Sydney International Airport [2000] ACompT 1 in relation to a comparable provision in Part IIIA of the Act, namely s 44H(4)In that case the Tribunal said (at [106]) that “promoting” does not require it to be satisfied there would be an advance in competition in the sense that any competition would be increased.  Rather “promoting” competition “involves the idea of creating the conditions or environment for improving competition from what it would be otherwise.  That is to say, the opportunities and environment for competition given [the exemption orders] will be better than they would be without [the exemption order].”

17            In Re Telstra Corporation Limited (No 3) [2007] ACompT 3 the Tribunal considered the passage cited above from Sydney International Airport and then went on to say (at [96]) that s 152AB requires the Tribunal to “have regard to ‘the extent to which’ [the exemption orders are] … likely to result in the achievement of the objective of promoting competition” and that the Tribunal “must consider the extent of the competitive impact of [the thing] … and the likelihood of that extent, not only the improvement of the environment for competition”.

18            As regards the third objective, encouraging efficient investment, in Seven Network Limited (No 4) the Tribunal said (at [130]):  “Efficient investment, however, implies the right mix. That is, efficient outcomes mean that optimal buy/build decisions are being made, as assessed from the perspective of end-users. By ‘optimal’ is meant providing the best outcome in terms of prices, quality and diversity”, and, we would add, innovation.

19            That said, reaching the state of satisfaction required by s 152AB(2) may not be a straight-forward exercise.  Satisfaction admits of different degrees of strength.  Whether or not the required state of satisfaction is reached will depend upon the sufficiency of the material before the Tribunal.  If there is direct reliable material of the state of affairs from which forward-looking assessments can be drawn the task of the Tribunal is made easy.  If, on the other hand, there is only circumstantial material, or simple modelling, or modelling that is contested, the Tribunal’s task will be difficult.  Its task will be difficult because of the possibility that there will be a variety of conclusions that may be open.  Moreover, when it is recalled that the task at hand is forward-looking, requiring an assessment of what is likely to happen in the future, the Tribunal must, if the material before it tends to be ambiguous, take particular care before it is able to reach the required conclusion (ie the requisite degree of satisfaction) that its decision (to grant an exemption) will result in a condition or environment for promoting competition and encouraging efficiencies.

2.2 The principles of market analysis

20            The task of the Tribunal in making a decision that is in the long-term interests of end-users of listed services requires an analysis of the relevant market in which the applicant and those affected by the decision operate.  Markets exist in two primary dimensions:  product type and geographic area.  To delineate the product dimension it is necessary to include all products that belong in the market and exclude all those that are outside it.  For present purposes it is sufficient to say that substitutability is the key condition for defining the product dimension of the market:  close substitutes are in the market; others are not.  The substitution that is regarded as relevant is in both consumption and production.  The economist George Stigler expressed it this way:  An industry should embrace the maximum geographical area and the maximum variety of productive activities in which there is strong long-run substitution.  If buyers can shift on a large scale from product or area B to A, then the two should be combined.  If producers can shift on a large scale from B to A, again they should be combined.  Economists usually state this in an alternative (technical) form:  “All products or enterprises with large long-run cross-elasticities of either supply or demand should be combined into a single industry.”  G Stigler, ‘Introduction’ in Business Concentration and Price Policy (1955) 4. (Now it is more usual to refer to a “market” rather than an “industry”).  Substitutability can be determined by a variety of constructs, including cross-price elasticity of demand and supply, the judgment of market participants, the existence of distinct sellers and buyers, and price gaps between products showing independence of price movements.

21            The geographic area of the market (ie whether it is local, regional, national or international) takes into account, principally, the area within which buyers choose to purchase their goods (ie actual buying patterns) and the areas within which sellers traditionally supply (or could easily supply in response to changed market conditions) their goods.

22            In light of the foregoing it is the Tribunal’s view that to determine the degree of competition that exists in a market it is necessary to examine both the state of actual rivalry between firms that are in the market and the threats to incumbent firms from new suppliers.  The credibility of those threats will depend upon the conditions which affect the ability of potential competitors to enter the market and become actual and effective competitors that constrain the power of the incumbent firms.

23            Once the market is established it is necessary to choose the most useful economic model to assess the many factors that will impact on competition in the market in the future.  When it comes to choosing the most useful model, there may be some difficulty.  The models developed by economists to assess market behaviour change over time.  Their assumptions about inter-firm rivalry and buyer behaviour often conflict, and their predictions differ.  It is often difficult to be sure that one approach is preferable to another, even if there is some common ground between them.  

24            One of the best known and historically most widely used models in industrial organisation analysis is the structure-conduct-performance paradigm originally developed at Harvard University many decades ago and promoted by F M Scherer:  see F M Scherer, Industrial Market Structure and Economic Performance (1970), a work which is now in its third edition (published in 1990) and written with D Ross.  Structure refers primarily to conditions such as firms’ market shares, concentration, technology, product differentiation, barriers to entry and buyer concentration.  These structural conditions are said to determine the conduct of market participants, such as decisions on price, advertising, and research and development.  Performance is typically measured in terms of consumer benefits, price, price stability, technological advancement and efficiencies.

25            The structure-conduct-performance paradigm has its critics.  Modern textbooks, such as D W Carlton and J M Perloff, Modern Industrial Organization (4th ed 2004) spend little time on this model.  One main criticism is that studies show little systematic correlation between concentration and profitability.  It has been shown that increases in concentration in particular industries are associated with both cost reductions and increased margins.  Another criticism is that the inference that higher profit margins in concentrated markets are a result of higher prices assumes that costs are constant as between markets with different concentration levels – and usually they are not.  See generally S Peltzman, ‘The Gains and Losses from Industrial Concentration’ (1977) 20 Journal of Law and Economics 229.

26            In 1978 Robert Bork published his influential The Antitrust Paradox: A Policy at War With Itself. Bork’s view is that conduct and performance determine market structure.  He replaced the largely static approach of the structure-conduct-performance paradigm with a more dynamically based view that the rational conduct of a firm, whose conduct is assumed to be guided by the goal of profit maximisation, will be competitive and that markets correct their own failures.  According to this view large market shares or tight market concentration are the result of superior efficiency.

27            For some time there has been debate whether the direction of causality under the old paradigm is strictly unidirectional, going from structure to conduct to performance, or whether there are also feedback effects that should be taken into account.  In other words, it is argued that structure and conduct affect one another continually as firms respond to changing market forces of supply and demand.

28            More recently, a number of economists (eg Salop, Willig) have developed models of strategic behaviour by firms with market power, in which firms act in response to external conditions and also act strategically to modify market structures and their competitors’ conduct, in order to shape the competitive environment into one most favourable to their own operations. 

29            The Tribunal is of opinion that, despite its critics, the structure-conduct-performance model provides a limited but nevertheless useful foundation for purposes of market analysis, provided its limitations (its static nature, its unidirectional focus, its “group” rather than individual competitor focus, and its failure to consider inter-firm rivalries and strategic behaviour (especially with respect to entry deterrence and barriers to expansion)) are kept in mind. Its main usefulness comes from its identification of the variables of interest in any examination of competition in a market.

2.3 Competition models

30            In determining whether an exemption will promote the long-term interests of end-users regard must be had to the extent to which the exemption is likely to result in the achievement of the three objectives mentioned in s 152AB(2).  The first objective is the promotion of competition.

31            What is meant by promoting competition?  The word “competition” has a technical meaning when used by economists and when used in the section it should be given that meaning.  Accordingly, it is necessary to determine what an economist understands by “competition”.

32            Economists have developed several competition models.  First, there is “perfect competition”.  In a perfectly competitive market every good is priced (a price that includes a margin for profit) at the cost of producing it (this is the good’s marginal cost) and every buyer willing to pay that price can buy it.  The conditions for perfect competition are:  (a) the goods produced by all sellers are homogeneous; (b) all buyers and sellers have perfect information about any aspect of the market; (c) there are no barriers to entry or exit; and (d) each seller’s market share is so small in proportion to the total market that one seller’s increase in output will not affect the decisions of other sellers:  see Scherer and Ross 15 - 18; P E Areeda, J L Solow and HHovenkamp, Antitrust Law  (3rd ed, 2007) vol IIB, 4 – 5;W K Viscusi, J M Vernon and J E Harrington Jr, Economics of Regulation and Antitrust (4th ed, 2005) Chp 6; W G Shepherd, The Economics of Industrial Organization (4th ed, 1997) 38.

33            A perfectly competitive market produces an equilibrium which results in the efficient use of resources in terms of both productive and allocative efficiency.  Allocative efficiency is achieved because no seller will expand production if the marginal revenue or price is less than the cost of producing the good.  Productive efficiency is achieved because the goods are produced at the lowest possible cost. A further benefit is dynamic efficiency because competition will force firms to seek to improve their goods or develop new goods as part of the battle.

34            A monopolist, on the other hand, faces no rivals, and is not forced to sell at marginal cost.  It can cut output and force prices above marginal cost.  When it reduces output, a monopolist distorts the allocation of resources.  It forces some inputs into other markets where their economic value is less.  Moreover, a monopolist is under no pressure to invent new products or methods. 

35            Having described the conditions for perfect competition it will be apparent that they do not exist in any market.  Nonetheless, because there is a need for a benchmark to analyse market behaviour in real industries, economists have developed other models to define competition, models that Scherer and Ross say are the result of a search for “more operational norms”:  Scherer and Ross 53.  The first is “workable competition”, a phrase coined by J M Clark:  J M Clark, ‘Toward a Concept of Workable Competition’ (1940) 30 American Econ Rev 241.  Quite what workable competition should consist of has caused much controversy.  At one level competition might be “workable” if there is rivalry between firms.  But, how much rivalry is required is not specified.  Another approach is to view competition as not “workable” if there is an absence of restraint on a firm’s economic activities.  Yet there are few markets in which a firm is entirely unrestrained.  Another possibility is that there is workable competition if no firm is able to influence the market price for goods.  This, however, is not significantly different from the model of perfect competition. 

36            Much of the literature on workable competition was analysed by S H Sosnick in his paper ‘A Critique of Concepts of Workable Competition’ (1958) 72 Quarterly Journal of Economics 380.  Sosnick suggests a large number of characteristics that will determine whether a market is workably competitive.  Scherer and Ross (at 53 - 54) have divided them into structural, conduct and performance categories as follows: 

Structural criteria:

·     The number of traders should be at least as large as scale economies permit.

·     There should be no artificial inhibitions on mobility and entry.

·     There should be moderate and price-sensitive quality differentials in the products offered.

Conduct criteria:

·     Some uncertainty should exist in the minds of rivals as to whether price initiatives will be followed.

·     Firms should strive to attain their goals independently, without collusion.

·     There should be no unfair, exclusionary, predatory, or coercive tactics.

·     Inefficient suppliers and customers should not be shielded permanently.

·     Sales promotion should be informative, or at least not be misleading.

·     There should be no persistent, harmful price discrimination.

Performance criteria:

·     Firms’ production and distribution operations should be efficient and not wasteful of resources.

·     Output levels and product quality (that is, variety, durability, safety, reliability, and so forth) should be responsive to consumer demands.

·     Profits should be at levels just sufficient to reward investment, efficiency, and innovation.

·     Prices should encourage rational choice, guide markets toward equilibrium, and not intensify cyclical instability.

·     Opportunities for introducing technically superior new products and processes should be exploited.

·     Promotional expenses should not be excessive.

·     Success should accrue to sellers who best serve consumer wants.

The point we draw from Sosnick’s work, as is made evident by Scherer and Ross, is that determining whether competition is “workable” involves an analysis of empirical data regarding the structure and dynamics of a market and its participants.

37            Perhaps the best shorthand description of workable competition is to envisage a market with a sufficient number of firms (at least four or more), where there is no significant concentration, where all firms are constrained by their rivals from exercising any market power, where pricing is flexible, where barriers to entry and expansion are low, where there is no collusion, and where profit rates reflect risk and efficiency.

38            There are some economists who speak of “effective competition”.  For example, Shepherd ((1997) at 18) describes effective competition as requiring internal and external conditions.  The internal conditions are:  (a) a reasonable degree of parity among the competitors; and (b) a high enough number of competitors to prevent effective collusion among them to rig the market.  The external condition is easy entry.  Effective competition denotes the idea that firms should be subject to a reasonable degree of competitive constraint from actual and potential competitors as well as from customers.

39            The ACCC has also adopted an “effective competition” model that borrows much from the models of workable competition and effective competition just discussed.  According to the ACCC, effective competition:

•           is more than the mere threat of competition – it requires that competitors be active in the market, holding a reasonably sustainable market position;

•           requires that, over the long run, prices are determined by underlying costs rather than the existence of market power (a party may hold a degree of market power from time to time);

•           requires that barriers to entry are sufficiently low and that the use of market power will be competed away in the long run, so that any degree of market power is only transitory;

•           requires that there be ‘independent rivalry in all dimensions of the price/product/service [package]’; and

•           does not preclude one party holding a degree of market power from time to time, but that power should ‘pose no significant risk to present and future competition’.


40            The last model of non-perfect competition which we will discuss is that of the “contestable market”.  This model was developed in the 1980s by W Baumol, J Panzar, E Bailey and R Willig.  It emerged from work done in the 1970s for the American Telephone and Telegraph Company to show that AT&T, although a monopoly, possessed no monopoly power.  The leading text is W J Baumol, J C Panzar and R D Willig, Contestable Markets and the Theory of Industry Structure (1982).  According to Baumol, Panzar and Willig, it is not the internal structure of the market that affects competition. Rather, an incumbent firm will be forced to deliver the optimal allocation of resources provided it is possible for a competitor to enter the market without any sunk costs (ie there are no barriers to entry) and leave the market without incurring any losses (ie where “hit and run” entry and exit are possible).  A perfectly contestable market is not perfectly competitive but, according to its proponents, will nonetheless produce an economically efficient outcome.

41            Analysing the competitiveness of a market by reference to potential competition diverts attention from the state of actual competition inside a market.  This has led to a substantial attack on the usefulness of the contestable market model.  One US decision has gone so far as to refer to it as a now “disproved” theory:  Midwestern Machinery Co v Northwest Airlines, Inc 392F3d 265, 282 (8th Cir, 2004).  The critical literature is extensive and particular reference should be made to R J Gilbert, ‘The Role of Potential Competition in Industrial Organization’ (1989) 3 J Econ Persp 107; G Hurdle et al, ‘Concentration, Potential Entry, and Performance in the Airline Industry’ (1989) 38 J Indus Econ 2; S A Morrison and C Winston, ‘Empirical Implications and Tests of the Contestability Hypothesis’ (1987) 30 JL & Econ 53; J E Stiglitz, ‘Technological Change, Sunk Costs and Competition’ in 3 Brookings papers on Econ Activity (1987) 883; M Schwartz, ‘The Nature and Scope of Contestability Theory’ (1986) 38 Oxford Econ Papers 37; A M Spence, ‘Contestable Markets and the Theory of Industry Structure:  A Review Article’ (1983) 21 J Econ Lit 981; W A Brock, ‘Contestable Markets and the Theory of Industry Structure:  A Review Article’ (1983) 91 J Pol Econ 1055. 

42            One of the theory’s main critics is Shepherd, who has written several papers highlighting the deficiencies of the model.  For example, in a seminal paper entitled ‘“Contestability” v Competition’(1984) 74 American Econ Rev 572 Shepherd asserts that research indicates that the internal conditions of a market are the primary determinant of competition.  He suggests (as do several other economists) that the market share of a firm, not barriers to entry, is the main structural determinant of profit rates.  One reason he gives is that major entry is rare.  Shepherd acknowledges ((1984) at 580) that entry barriers do have an effect on competition, but he says “no significant evidence exists that free entry has or will fully neutralize market dominance, much less pure monopoly”.  The problem, according to Shepherd, is that barriers to entry, the non-existence of which is critical to the model, “cannot be measured reliably, and they probably never will be … Combining [all] the elements into a total estimate of a barriers’ height is even more difficult and unscientific”:  Shepherd (1997) at 214.  Presumably that is the reason barriers can (and are) only described as “high”, “medium” or “low”. This description is unlikely to be helpful in many circumstances.  Shepherd suggests it will be unhelpful if the decision-maker is required to make an assessment of the state of competitiveness of a market based on contestability criteria which are largely incapable of accurate measurement and because the model ignores actual conduct in the market (and indeed in its pure form assumes away any incumbent responses to entry).

43            Areeda et al point out (at 74) that:  “[T]he existence and magnitude of entry barriers is easily disputed and the evidence ambiguous”.  It is also quite hypothetical to consider future entry, by unknown firms, under market conditions that differ from those of the past or present.  The critics contend that even past entry may not say much about the competitiveness of a market.  Shepherd, for example, says ((1997) at 209):  “[E]ntry and exit among fringe firms are largely irrelevant to the position of the dominant firm.  What matters is the bite which the new entrants take out of the dominant firm’s market share.  Accordingly, entry is correctly defined not in terms of the entrants’ own shares, but rather in terms of the decline of the dominant firm’s share of the market”.  Any other approach misses the true economic impact of entry.  In addition, regard must be had to whether entry occurred when the structural characteristics of the market were different, or whether an entrant was particularly well positioned to enter the market because it had access to a scarce asset.  

44            The critics of the contestable market theory do not suggest that historical entry cannot provide some guidance for the future.  Past entry will be a useful guide if: (a) past entrants were successful in taking market share from the incumbent and developing a business; (b) past entry was not unique; (c) past entrants did not have to undertake substantial investment in sunk assets; (d) past entrants were able to enter quickly; (e) past entrants were able to survive; and (f) key structural characteristics of the market (such as market growth, government policy, asset and funding availability, consumer tastes, technology, minimum efficient scale (MES) etc) have not changed to make future entry more difficult.  But, say the critics, it is still necessary to be careful. 

45            As regards the potential entrant, Shepherd says (in the third edition of his work) that:  “Potential competition will almost always have less force than actual competition.  Whenever there is more than one incumbent firm, each has to consider its competitor[s] as an immediate threat to its market share.  Even if an existing rival is small, it is present.  It already exerts in full the pressure a potential entrant may have if it chooses to enter.  Therefore an actual competitor is more important than a potential entrant of comparable or smaller size.  A more tenable assumption is that potential competition is secondary and blends in with other marginal competitive possibilities.” One point Shepherd and his supporters miss, however, is that actual restraint imposed by an existing rival may not be superior to the threat imposed by a potential entrant if the potential entrant is bigger, better resourced, more committed and has a reputation for successful long-term entry in other markets.

46            While not subscribing to all that the critics of the “contestable market” say, in the Tribunal’s view the mere physical fact of entry and the potential for further entry in most cases is an inconclusive guide to the competitiveness of a market.  A proper understanding of the effect of entry and potential entry requires a comprehensive assessment of the structural and behavioural characteristics of the market and the behaviour of firms in that market.  

47            Even the proponents of the contestable market theory admit that an empirical evaluation of the market as it exists has a contribution to make which may be more useful than the theory.  Baumol and Willig state:  “[O]ne suspects that empirical reality embodies relationships more robust and stable than does oligopoly theory in its current tumultuous state”:  W J Baumol and R D Willig, ‘Pricing issues in the deregulation of railroad rates’ in J Fisinger (ed), Economic Analysis of Regulated Markets (1983) 15.  This echoes the position of Edward Mason, regarded as the ‘father’ of industrial organisation, who wrote that “[i]t would no doubt be extremely convenient if economists knew the shape of individual demand and cost curves and proceed forthwith, by comparisons of price and marginal cost, to conclusions regarding the existing degree of monopoly power.  The extent to which monopoly theorists, however, refrain from an empirical application of their formulae is rather striking.  The alternative, if more pedestrian, route follows the direction of ascertainable facts and makes use only of empirically applicable concepts”:  E S Mason, ‘Price and production policies of large-scale enterprise’ (1939) 29(1) American Econ Rev 61, 62. 

48            What, then, do we draw from the various models for studying a market to determine its competitiveness and for assessing how the market may behave in the future?  In the Tribunal’s view a market is sufficiently competitive if the market experiences at least a reasonable degree of rivalry between firms each of which suffers some constraint in their use of market power from competitors (actual and potential) and from customers.  The criteria for such competition are structural (a sufficient number of sellers, few inhibitions on entry and expansion), conduct-based (eg no collusion between firms, no exclusionary or predatory tactics) and performance-based (eg firms should be efficient, prices should reflect costs and be responsive to changing market forces).

2.4 Determining competitiveness

49            In a “perfectly competitive” market a firm will not have the ability to deviate profitably from marginal cost pricing:  that is, it will not be able to raise prices without a significant loss of sales.  On this basis the most reliable measure of competition is to discover whether a firm charges above marginal cost for its goods or services.  If there is a high mark up over marginal cost for a sustained period the market is not effectively competitive:  L A Sullivan and W S Grimes, The Law of Antitrust (2000) 59; Areeda et al at 115 - 119.  But, as these writers point out, this measure of competition (or, as some would have it, of market power), known as the Lerner Index, while being the best way in theory of measuring competitiveness, is rarely used in practice because of the difficulty of establishing the marginal cost of a good.

50            The second, and most widely used, method of measuring competitiveness in real-world markets is to look through the proxy lens of market share and concentration.  To measure market share involves identifying the firms in the market, calculating the appropriate unit of measure (for example the dollar value of sales, number of units sold, or capacity) and then computing each firm’s share of the total.  Concentration ratios are usually expressed in terms of the HHI index (after its inventors Herfindahl and Hirschman), which is measured as the sum of the squared market share of each firm.  As a general proposition if one firm has more than 25 to 30 per cent of the market (some economists use a slightly higher percentage) that firm will be regarded as having significant market power and the market will probably not be competitive.  However, a market in which there are four firms each with an equal share is likely to be more competitive than a market where one firm that has an 80 per cent share and the three others split the remaining 20 per cent.  Thus it is necessary to consider not only the number of firms in a market but also the distribution of, or variation in, their market shares, especially in relation to the leading or dominant firm whose activities are the subject of the investigation.

51            The Tribunal acknowledges that the competitiveness of a market cannot be measured simply by the number of firms in the market, their market shares and the market concentration. That can only be the starting point of the analysis.  A feature that is “equally important” (to adopt the terminology of Viscusi et al (at 164)), or simply another factor that must be brought to account, is the ease of market entry.  Viscusi et al state (at 164-165) that entry conditions are important in assessing competition in a market, first because the number of firms in the market is partially determined by the cost of the entry as well as by factors such as economies of scale.  Hence entry conditions play a role in determining concentration.  Second, entry conditions determine the extent of potential competition.  Most courts and economists accept ease of entry by potential competitors is likely to affect the competitiveness of the actual competitors.  The debate among economists concerns the extent to which it has that effect.  We note that this debate is not based simply on theoretical differences of opinion.  P Geroski, R J Gilbert and A Jacquemin, in Barriers to Entry and Strategic Competition (1990) undertook a review of the empirical data on the effect of entry.  They looked at the effect of actual entry in thirty industries in the United States.  These studies indicated that entry or potential for entry had only a small effect on industry structure.  In their view (at 84):  “The potential impact of entry seems to be modest.  Entrants usually do not take much market share from industries leaders but instead tend to take a market share from small incumbents.”  They also observed that:  “Post-entry survival is not easy”, as clearly incumbent firms will react strongly to new entry and attempt to repel it, unless the entry is clearly of the niche type, and unless there exist (or can easily be constructed) barriers to the expansion of the new firms.

52            Whether market entry is easy or difficult depends upon what economists refer to as barriers to entry.  There is considerable controversy about the proper definition of entry barriers.  Joe Bain treats as a barrier any factor, real or perceived, that as a realistic matter discourages entry:  J S Bain, Barriers to New Competition (1956) 3.  His main antagonist, Stigler, prefers a narrower definition.  Stigler treats as a barrier only those costs that a new entrant must incur but which are not (or have not been) incurred by the incumbents.  In ‘Ease of Entry:  Has the Concept Been Applied Too Readily?’ (1987) 56 Antitrust LJ 43, R L Schmalensee explained the practical differences between the two approaches:

Stigler’s followers tend to look at what an entrant must do to become established … and to find that those are more or less the same things that established firms had to do to become established firms.  Looking at the two identical lists inclines one to say, ‘Gee, there aren’t any barriers.’  The analysis of lists tends to assume away the possibility – real in some cases, I would argue – that, while the same things must be done, they are done on different terms by an entrant than by an incumbent.  The entrant faces a different competitive environment when building a reputation, than an incumbent firm did.

Bain’s followers … tend to find a lot of barriers in practice.  Followers of Bain tend to look at established firms as they exist in place, not to focus on the process they had to go through to get there.  Many of Bain’s followers, for instance, tend to consider the need to raise a lot of capital to be necessarily a barrier to entry because it is hard to raise, say, $200 million quickly – even though of course, established firms also had to raise $200 million. 

53            The Tribunal would proceed on the basis that barriers to entry are both structural, based on exogenously determined market characteristics, and endogenous, being the result of the incumbent’s strategic behaviour to deter entry.  Structural barriers are based on cost structures, such as economies of scale, switching costs, demand characteristics (eg preferences for differentiated products), access to information and legal restrictions (eg patents or environmental regulations).  Strategic barriers include limit pricing and general entry deterrence, advertising, targeted innovation, product proliferation, expansion of capacity, predatory responses to entry and any other targeted action that would “raise a rival’s costs”.  Consequential variations in both market share and market concentration over time as entry occurs must also be examined.  The Tribunal is of opinion that any assessment of the effect of barriers to entry, in a forward-looking sense, must include a comprehensive assessment of the current structural and behavioural characteristics of the market and firms at issue, and of how past conduct has shaped this structural and behavioural environment. 

54            When the state of actual competition in a relevant market has been assessed, the next step is to determine what is likely to happen in the future in two circumstances:  (a) if the exemption is granted; and (b) if the exemption is not granted.  This step will involve assessing future events.  Many matters may have to be considered.  Judgments will have to be made about uncertain matters such as that the preferences of customers may change, new products may be developed, technology may improve, and increased capacity may be achieved.

2.5 Any-to-any connectivity

55            The second objective is any-to-any connectivity.  The idea is that the end-users of a particular service are able to communicate with each other end-user who is supplied with the same or similar service whether or not the end-users are connected to the same network:  see s 152AB(8).  

2.6 Efficient investment

56            The third objective that the Tribunal must consider is whether granting an exemption is likely to result in the achievement of encouraging the economically efficient use of, and economically efficient investment in, infrastructure.  The causal connection between economic efficiency and competition is not a matter that is capable of proof.  But the Tribunal accepts the widely held view (if not the article of faith) of economists that efficiency is the product of competition and if a thing is, or is likely, to result in the achievement of the objective of promoting competition that thing will, or is likely to, encourage efficiencies.  As Areeda et al (at 402b) explain:  “A perfectly competitive economy produces an equilibrium that yields efficient use of resources in both the productive and allocative senses”. 

3 The Full Court’s decision

57            It is necessary to consider whether the decision in Telstra Corporation Limited v Australian Competition Tribunal [2009] FCAFC 23 requires the Tribunal to alter what would otherwise be its approach in dealing with an application for an exemption order. 

58            In its earlier reasons (Application by Chime Communications Pty Ltd [2008] ACompT 4) the Tribunal, in line with orthodox industrial organisation principles, said (at [56]) that:  “[D]etermining the competitive state of the market should be largely an empirical exercise. This involves examining observable market behaviour. There are many indicators of a competitive market. Principally they are: (a) the number of new entrants; (b) the growth of the entrants’ market share (either through attracting new business or taking share from the incumbent); (c) an increase in the range and quality of services provided; and (d) a reduction in the price of services. If these indicators are present they show not only rivalrous behaviour, but also socially-beneficial rivalrous behaviour”.  The Tribunal also suggested (at [72]) that for purposes of determining whether deregulation would likely achieve the object of promoting competition it was necessary to have information about eight different factors (which the Tribunal described as a roadmap).  These factors are:  “(a) the total number of addressable SIOs in the market; (b) the number of exchanges in which there is at least one entrant; (c) the number of entrants [in each exchange]; (d) the total number of addressable SIOs broken down on an exchange by exchange basis in the subject exchanges; (e) the share of SIOs that the entrants have taken from the incumbent; (f) the physical capacity and operational willingness of the entrants to take more market share; (g) the cost and ease of installing new infrastructure; and (h) the capacity and technology status of each DSLAM in each exchange”.

59            Telstra challenged this approach in its application for judicial review of the Tribunal’s decision.  In particular, it took issue with the suggestion that there need be empirical evidence to show the state of competition in a market.  The submission put to the Full Court was, in substance, that the Tribunal’s “evidentiary requirements … are unduly onerous and demanding such that they are inconsistent with (and more demanding than) a test based on the legislative touchstones of ‘satisfaction’ and ‘promotion’ (the language adopted in s 152AT(4)) and ‘likely’, ‘promoting’ and ‘encouraging’ (the language adopted in ss 152AB(2)(c) and (e))”:  Telstra Corporation Limited at [157].  Telstra also submitted that these evidentiary requirements were “inconsistent with, and go beyond, the established approach of assessing ‘competition’, which is to focus on barriers to entry and expansion” (Telstra Corporation Limited at [157]) and that “entry in fact and the threat of entry” is the “ultimate regulator of competitive conduct” (Telstra Corporation Limited at [169]).

60            The Full Court did not deal with Telstra’s assertion that the “established approach” to the assessment of “competition” is to focus on barriers to entry.  It will by now be evident that the Tribunal’s view is that the nature and extent of competition in a market are the outcomes of both structural and behavioural factors. 

61            Interestingly, Dr Patterson, Telstra’s expert, does not differ from this aspect of the Tribunal’s approach.  For example, in the context of examining the state of competitiveness in the markets in issue here, Dr Patterson acknowledged that “[m]arket share analysis is commonly used as a high level litmus test for determining whether markets are competitive”.  In his report Dr Patterson described analysing internal market conditions such as “brand loyalty, switching costs etc” as other factors that might “undermine workable competition”. And for the purpose of his report he undertook that analysis, examining internal market features, including market shares, switching costs and churn behaviour, to express his opinions about competitiveness in the relevant markets.

62            The Full Court agreed with Telstra’s submission that the Tribunal had imposed an unduly onerous and demanding obligation in requiring empirical evidence about markets to arrive at a conclusion about the competitiveness of those markets.   

63            The Full Court’s actual holding is, however, a little unclear.  It will be recalled that in its reasons the Tribunal suggested that as a basis for drawing inferences on whether deregulation is likely to achieve the objective of promoting competition, regard should be had to at least the eight factors, which it referred to as a roadmap.  The Full Court said (at [174]):  “To impose a requirement of empirical evidence which addressed the various matters set out in the road map as a minimum set of standards for an applicant for exemption to meet in a case such as the present is, as Telstra submitted, to apply the wrong test to the objective of competition required to be considered under s 152AB(2)(c)”.

64            If read in isolation, the Full Court’s “wrong test” holding might be confined to the need for there to be evidence about the factors mentioned in the roadmap – although few other factors would bear upon the issue of the competitiveness of a market.  In the Tribunal’s view, however, a fair reading of the Full Court’s judgment shows it did not limit the subject matter in respect of which empirical evidence was not needed.  In a later part of its reasons the Full Court made its position clear.  It said (at [229]) that a real vice in the approach taken by the Tribunal was “[i]ts insistence upon having solid empirical evidence establishing the true state of competition at the time the exemption orders were under consideration”.  In other words, the Full Court said that it is possible (and perhaps even necessary) to determine present, and assess future, competitiveness in the absence of empirical evidence about market structure and market behaviour. 

65            The Tribunal is not aware of any recognised economist working in the area of industrial organisation who subscribes to this view.  It would require the clearest language to impart such a view to the Parliament. 

66            The reasoning which led the Full Court to its conclusion centres on s 152ATA.  That section provides, in substance, that a person who expects to be a carrier or carriage service provider may apply to the ACCC for an order that the person be exempt from access obligations in the event that a specified service or proposed service becomes a declared service.  The order cannot be made unless the ACCC is satisfied that it will promote the long-term interests of end-users

67            The Full Court observed (at [28]) that s 152ATA is “solely concerned with future events”.  That is true up to a point.  The section can be invoked before a person becomes a carrier or carriage service provider and before any eligible services have been declared.  Because s 152ATA is “solely concerned with future events” the Full Court reasoned (at [28]) that if an application under the section were made the ACCC “would have to consider the application without the benefit of any empirical evidence”.  The Full Court went on to say (at [153]):  “It may be impossible for an applicant under that section [152ATA] to adduce any empirical evidence or any hard evidence at all.  An applicant may have to rely entirely on expert evidence of a predictive nature”.

68            The Full Court then said (at [153]) that s 152ATA was “complementary” to s 152AT and hence “provides a guide … to the nature and quality of the evidence that might support a successful application under s 152AT”.  What, presumably, the Full Court had in mind was that if no evidence were needed to support an application under s 152ATA it would be wrong to insist upon evidence to support an application under s 152AT. 

69            With respect, the fallacies in the Full Court’s reasoning are obvious.  First of all, the assumption that an applicant would have no empirical evidence to support an application under s 152ATA is unsupportable.  Telecommunications is a major Australian industry.  As at 30 June 2007 there were 169 licensed telecommunications carriers and 1231 carriage service providers.  As well as basic telephony, the services they provide include the internet, mobile telephones, satellite communications, messaging, email and video conferencing.  There are many platforms on which those services are produced.  In particular, there is Telstra’s copper wire network, as well as cable, satellite and fibre optic platforms.  As new technologies emerge new forms of communication will develop.  And, with new platforms or new services, new markets may develop that will compete with the old.

70            Thus, an applicant who seeks an anticipatory exemption under s 152ATA in respect of a yet-to-become operational service that may become a declared service is no Alexander Graham Bell entering some telecommunications wasteland.  This applicant intends to compete for business against existing carriers or service providers.  The notion that in such circumstances there will be no relevant empirical facts on which to base an assessment of the effect on competition of an anticipatory exemption order can only be based on a misunderstanding of the context in which the application will be made.   

71            In any event, even if, in a particular case, there are no empirical facts to provide a basis for the analysis required to be undertaken before an order under s 152ATA could be made, that says nothing about an application under s 152AT where there always will be empirical facts to support the required analysis.  The position that commends itself to the Tribunal, in order to properly assess the degree of competition in a market in an application under either section, is that if there is relevant and important material available, it should be produced.  If it is not, the applicant is unlikely to succeed.  If, on the other hand, there is little or no such material available, then the Tribunal must do the best it can. 

3.1 Is the Full Court’s decision binding?

72            A court’s function on judicial review is to enforce the rule of law over executive action.  Judicial review “is the means by which executive action is prevented from exceeding [its] powers and functions”:  Church of Scientology Inc v Woodward (1982) 154 CLR 25, 70 per Brennan J.  But courts can themselves overreach when attempting to regulate the conduct of the executive.

73            First of all, judicial review is not an appeal.  Courts of appeal may correct errors of fact and errors of law:  Norbis v Norbis (1986) 161 CLR 513.  By contrast, statutory provision apart, a supervising court only has power to correct a subordinate tribunal in respect of errors which go to jurisdiction or errors of law that appear on the face of the record.  Jurisdictional error is narrowly defined.  In Craig v The State of South Australia (1995) 184 CLR 163, 179 the High Court explained that jurisdictional error arises if a “tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion”. 

74            In relation to errors of fact, the supervising court’s role is very limited.  Putting to one side those cases where a finding of fact is “jurisdictional” in the sense that the tribunal’s jurisdiction depends upon the existence of the fact, judicial review is not available to correct a mere error of fact.  In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 340, Mason CJ said:  “[I]n ordinary circumstances, a finding of fact, including an inference drawn from primary facts, will not constitute a reviewable decision”.  It will only be reviewable if the error is material and the tribunal acted without any evidence:  Roads Corporation v Dacakis [1995] 2 VR 508, 520; see also Sinclair v Mining Warden at Maryborough (1975) 132 CLR 473.

75            The limitation on the power of a supervising court can be quite important.  For instance, Part XIC uses many technical expressions (eg “competition”, “efficiency”).  When a statute uses a technical word, the question whether the word is to be given its ordinary English meaning or its technical meaning is a question of law:  Cozens v Brutus [1973] AC 854; Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389.  A decision made by a subordinate tribunal on such a question is amenable to judicial review.  However, once it has been decided that a word has its ordinary or non-legal technical meaning, the meaning is a question of fact:  Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60; NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509; the discussion in Collector of Customs at 395 – 397 does not affect this proposition.  A tribunal’s decision on that question is not reviewable unless along the way to reaching its decision the tribunal commits a jurisdictional error.

76            Applying those rules here, when the Tribunal comes to consider whether the word “competition” in s 152AB has a technical meaning that is a question of law which, if in dispute, is reviewable.  It is common ground that the word “competition” has a technical meaning.  What that meaning is is a question of fact for the Tribunal to decide.  The supervising court has no role to play unless the Tribunal’s decision is made without evidence (an unlikely possibility given that the Tribunal is entitled to take into account its own knowledge of the world of economics) or is irrational in the Wednesbury sense:  Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.  Finally, it is for the Tribunal to decide what material should be looked at for purposes of considering the competitiveness of a market, provided that the material it takes into account is not irrelevant to that issue and it takes into account all the relevant material. 

77            It is to be observed that the Full Court did not hold that the Tribunal proposed to take into account irrelevant material in so far as it insisted on empirical facts about the state of competition in the relevant markets.  The Full Court merely said that the Tribunal was not required to have regard to empirical facts to reach a decision.  That, however, seems to be a matter for the Tribunal to determine, for it must decide whether the material before it is sufficient to enable a decision to be made on the basis of it attaining the appropriate level of satisfaction.. 

78            Strictly it is not necessary to decide whether the Full Court exceeded its role by substituting what it thought was the appropriate material upon which a decision should be based for the thinking of the Tribunal.  It is, however, a matter that will be determined if an applicant is willing to run the risk of coming before the Tribunal with an application without relevant empirical material in circumstances where that material is available.

3.2 Other aspects of the Full Court’s decision

79            When the Tribunal dealt with Telstra’s applications for exemption it said it could not reach any conclusion about the competitiveness of the relevant markets and hence could not be satisfied that the exemption orders sought would promote the long-term interests of end-users.  The Tribunal did not go on to consider the objectives of achieving any-to-any connectivity and encouraging efficient investment.  The Full Court said the Tribunal was in error in failing to consider the objective of encouraging efficient investment.  (It said little about any-to-any connectivity as it had been agreed this was not an issue).

80            The Full Court explained why the Tribunal’s failure to deal with the third objective was an error.  First it said (at [270]) that no individual objective in s 152AB “has primacy in terms of its weight or influence upon the relevant decision over either of the other objectives”.  Accordingly, “the decision-maker must have regard to each of the objectives and come to a view as to whether the particular thing [ie the exemption order] will promote the [long-term interests of end-users] and, if so, the extent to which it will do so … There may be tension between the objectives.  One may carry more weight in a given case than the others.  But they must all be considered and weighed in every case”:  Telstra Corporation Limited at [270], [272].    

81            As a matter of strict theory, what the Full Court said is correct.  But in very few cases will it be necessary to consider separately the competition objective and the efficiency objective.   This is because, generally speaking, it is competition that produces the efficiencies identified in s 152AB(2)(e).  That is to say, in most cases if competition is promoted efficiencies are encouraged. 

82            The Tribunal acknowledges that there may be rare cases where competition is encouraged but no efficiencies are achieved.  The best, but most unlikely, example would be where an entrant duplicated Telstra’s copper network.  The whole point about a natural monopoly such as Telstra’s copper network is that it is wasteful to duplicate it.  It is also possible, in another rare case, to reach the conclusion (as Bork might) that encouraging the establishment of a monopoly will be pro-competitive. 

83            Putting those rare cases to one side, the Full Court’s approach assumes that the efficiency objective has a life of its own.  That approach is not correct.  Economic efficiency is the ultimate product of competition.  To put the point bluntly, if there be no competition then, in most cases, there will be little or no economic efficiency. 

84            The Full Court did not deal with Telstra’s submission that the competition objective required only the identification of market power and thus the existence and height of barriers to entry.  Nonetheless the Tribunal thinks it will be of assistance for it to express its view on this submission.

85            Market power is usually defined as the seller’s ability to raise and sustain its price above marginal cost without losing sales:  W M Lander and R A Posner, ‘Market Power in Anti-Trust Cases’ (1981) 94 Harv L Rev 937; Carlton and Perloff at 8 (“The ability to price profitably above the competitive level is referred to as market power”); Scherer and Ross at 17 (Market power or monopoly power is the possession of “some degree of power over price” or the ability to use changes in output to influence price); H Hovenkamp, Federal Antitrust Policy The Laws of Competition And Its Practice (3rd ed, 2005) 79 (“Market power is a firm’s  ability to increase profits by reducing output and charging more than a competitive price for its product”); G A Hay, ‘Market Power in Antitrust’ (1992) 60 Antitrust LJ 807, 813 (Market power definitions are satisfied “by any firm facing a downward sloping demand curve”). 

86            In Queensland Wire Mason CJ and Wilson J pointed out that there were several methods of determining the existence of market power.  They said (at 189):  “Courts have often looked to market share to determine degree of market power” citing several leading US decisions.  They concluded (at 189) that:  “[A] large market share may well be evidence of market power … but the ease with which competitors would be able to enter the market must also be considered”.  According to the judges (at 190), “[a]nother indicator of market power … is vertical integration”.  Notably Mason CJ and Wilson J acknowledged that the presence of vertical integration does not necessarily mean that a substantial degree of power exists.  Nonetheless, they cited the following comments of Fuller (at 190): “Vertical integration always accompanies monopoly, not because it raises barriers to entry, but because it gives the monopolist greater power to extract more favourable prices from its customers”.

87            Queensland Wire makes it plain that there are several indicia of market power, and none may be conclusive in a particular case.  For present purposes it is sufficient for us to note that the inquiry mandated by s 152AB is directed to the promotion of competition and not the existence of market power.  While there is overlap between the concepts they are discrete.  Telstra’s argument blurs the differences and, impermissibly in the Tribunal’s view, seeks to limit the factors to which regard may be had to test the competitiveness of a market.

4 Background to Telstra’s applications

88            With the preliminaries out of the way it is possible to return to the four applications to review the ACCC’s decisions to exempt from the standard access obligations the LCS and the WLR service.  The background to the review applications is set out in the Tribunal’s earlier decision.  Some repetition will be convenient. 

89            Exemption orders were sought from the ACCC in respect of the provision of WLR/LCS in 387 metropolitan exchange service areas (ESAs).  When the matter was first before the Tribunal, Telstra identified seven of the subject ESAs where it no longer pressed its claim for exemption.  The remaining 380 ESAs are referred to in these reasons as “the nominated ESAs”.

90            The traditional telecommunications network (and the one owned by Telstra) is usually referred to as the public switched telephone network (PSTN).  The PSTN is comprised of:  (a) the customer access network (CAN) connecting end-users to local exchanges (a local loop); and (b) the inter-exchange network which enables calls to be routed between local exchanges through other exchanges. 

91            There are five relevant declared services which Telstra is required to supply over its fixed network.  The five declared services are: (a) the ULLS; (b) the line sharing service (LSS); (c) the PSTN originating access service (PSTN OA); (d) the WLR service; and (e) the LCS.  Only two of those services (WLR and LCS) are the subject of the present applications while a third service (PSTN OA) is the subject of separate exemption applications which are before the Tribunal in separate proceedings. 

92            The ULLS involves Telstra providing an access seeker with access to an unconditioned local loop (sans dial tone or other carriage service) on Telstra’s CAN between an end-user’s premises and a Telstra exchange.  An access seeker may use the service in conjunction with its own facilities (such as a DSLAM or a MSAN) to provide a retail voice and broadband service to an end-user or to provide wholesale services to another service provider.

93            The LSS involves Telstra providing an access seeker with access to the non-voiceband frequency of an unconditioned wire on Telstra’s CAN between an end-user’s premises and a Telstra exchange.  An access seeker may use the LSS service in conjunction with its own facilities (such as a DSLAM or a MSAN) to supply high-speed internet access while Telstra retails or wholesales the underlying voice service.  An access seeker may also use the LSS to provide an end-user with a voice over internet protocol (VoIP) service.  Whether VoIP is a substitute for a PSTN voice service is an issue between Telstra (contending it is) and the ACCC (contending it is not).  Resolution of the issue is not necessary for the Tribunal’s determination of the present applications.

94            The PSTN OA service typically involves Telstra’s carriage of a telephone call from an end-user calling party to a point of interconnection (POI) with an access seeker’s network.  The POI is usually located at a trunk exchange.  The calling party is assigned a number from the Australian Numbering Plan and is directly connected to Telstra’s network.

95            Access seekers commonly bundle the PSTN OA with the WLR service and LCS to provide an end-user with a fixed voice service package of local, long-distance, international and fixed-to-mobile calls.  This bundling of the three services suggests a need for the Tribunal to have in mind that its decision in these proceedings may have ramifications beyond the services (the WLR/LCS) which are the subject of these proceedings.

96            To use the PSTN OA service to provide an end-to-end service, an access seeker would need to acquire other inputs (such as switching) and services (such as transmission and terminating access).  The access seeker may do this by either making a modest investment in its own switching and transmission infrastructure or by acquiring switching and transmission services on a wholesale basis from another service provider.

97            The WLR service involves Telstra supplying an access seeker with a basic line rental service that allows an end-user to connect to Telstra’s CAN.  The end-user is provided with a telephone number and the ability to make and receive standard PSTN local, long-distance, international and fixed-to-mobile voice calls.  The WLR service may be used by an access seeker without the need to invest in its own infrastructure.

98            The LCS may be used by an access seeker to supply a local call service to an end-user with Telstra being responsible for the carriage of the call between the calling party and the called party.  As with the WLR service, the LCS may be used by an access seeker without the need to invest in its own infrastructure.

99            The overall context in which an access seeker may use the relevant services is in a market with one very large firm, Telstra, one moderately sized firm, Optus, and a number of third-tier firms of modest size compared with Telstra and Optus.  While compared with Telstra Optus is moderately sized, Optus’ share of the market is many times greater than the next largest firm.  Generally, the third-tier firms offer a smaller range of services in fewer geographical areas than Telstra and Optus.

100          In that context, the three ways that Telstra, Optus and the third-tier firms may compete are by way of: (a) full facilities-based competition; (b) access-based competition; and (c) resale-based competition.

101          Full facilities-based competition involves firms using their own stand-alone infrastructure that is capable of providing substitutable services (for example, the provision of a local call service over an end-to-end fibre network which is substitutable for the provision of a local call service over Telstra’s CAN).  Access-based competition is a lesser form of facilities-based competition where an access seeker competes with Telstra using a combination of its own facilities (such as a DSLAM or a MSAN, typically installed in a Telstra exchange) and access to Telstra’s CAN to provide services (voice and/or broadband) to an end-user by way of Telstra’s ULLS or LSS.  Resale-based competition typically involves an access seeker competing with Telstra by acquiring Telstra’s wholesale PSTN OA service, the WLR service and/or the LCS and using those services in the provision of fixed voice services.

102          With both the LCS and the WLR service, the access provider supplies its retail services on a wholesale basis to a service provider.  The service provider places its brand name on the service and promotes the re-branded service to end-users.  Competition takes place in the marketing, billing and customer support of the service.  There is little, if any, real differentiation in the service itself.  End-users will benefit to the extent that service providers compete with each other and against the incumbent to keep the overall price of supplying the service in line with the cost of supply. 

103          As already mentioned, an entrant with access to ULLS or LSS requires equipment to provide services to end-users.  That equipment is usually located in an exchange in space leased from Telstra.  The typical piece of equipment which the entrant will install is a DSLAM.  (We use the term DSLAM to embrace MSANs and other equipment capable of providing voice and/or data services by way of the ULLS or LSS.)  Typically, a DSLAM connected to the ULLS is configured so that the entrant may provide a bundled voice and broadband data service while a DSLAM connected to the LSS is configured so that the entrant may only provide broadband data services (the underlying voice service being wholesaled or retailed by Telstra).  DSLAMs have a relatively short commercial life expectancy because the technology is changing rapidly.  Further, as the nature of the services supplied by a DSLAM changes, there is a corresponding need to change all or part of a DSLAM.  By way of example, a DSLAM which is required to provide asymmetric digital subscriber line (ADSL) services must contain shelves with ADSL cards.  If it is to provide voice and data services it must also contain a splitter and voice cards.

5 The basis of Telstra’s application

104          With this background in mind, we now turn to the exemption applications themselves.  The basis for the applications is that it is in the long-term interests of end-users to grant the exemptions in each ESA where one entrant (ie a competitor of Telstra) has installed at least one DSLAM.  Put briefly, the argument in support of the exemptions is along the following lines.

105          The LCS, WLR service and ULLS are each wholesale service.  As has been observed, an access seeker which has acquired the LCS and the WLR service is able in the retail market to supply a phone line and local calls.  If the access seeker has also purchased PSTN OA and PSTN terminating access service (PSTN TA) the access seeker is able to supply a bundle of services including the phone line, local calls, fixed-to-mobile calls, national calls and international calls.   

106          An access seeker who has acquired ULLS may install a DSLAM and is able to supply both fixed voice services (that are the equivalent to the voice service available through the use of the LCS and the WLR service) and broadband services. 

107          Accordingly, in the downstream (retail) markets for the provision of fixed voice services (usually the bundle of local calls, national calls, international calls and fixed to mobile calls) or fixed voice services and broadband data, ULLS is a substitute for the WLR service and the LCS.  Or as Dr Patterson puts it, ULLS is a “commercially viable substitute” for the WLR service and the LCS.  He says it is a “commercially viable substitute” because: (a) with the use of appropriate infrastructure it permits the supply of fixed voice services; and (b) there are no, or no significant, barriers to the entry of ULLS-based fixed voice services. 

108          Telstra’s argument about the substitutability of ULLS is not analysed in the context of a market.  Speaking generally, the relevant product or service markets in which one would ordinarily determine the effect of the exemptions in the future with and the future without scenarios are: (a) the downstream (retail) markets for the supply of all fixed voice services; (b) the upstream (wholesale) markets for the supply of wholesale inputs into the retail supply of fixed voice services, including the WLR service, LCS and ULLS; (c) the upstream (wholesale) markets for the supply of bundled broadband and voice services; and (d) the downstream (retail) markets for the supply of bundled broadband and voice services. 

109          Rather than define the geographic dimensions of the markets, the parties have adopted an ESA-by-ESA approach.  The Tribunal is of the view that in these applications such an approach is permissible, provided certain safeguards are applied when appropriate.  That is to say, the Tribunal accepts that if it is possible to reach conclusions about the long-term interests of end-users by an analysis of an appropriate geographic component of a relevant market, there is no reason to refrain from doing so.  And the Tribunal accepts that here the objectives of promoting competition, achieving any-to-any connectivity and encouraging efficient investment can be considered on an ESA-by-ESA basis because that is the geographic location of the sellers’ facilities and it is also where customers have access to those sellers.

110          There are, though, circumstances in which an ESA-by-ESA analysis may not work.  For example, the number of ESAs in issue, or the number of addressable SIOs in those ESAs, may not constitute a sufficiently large section of the relevant market to enable conclusions about market behaviour to be drawn. 

111          According to Dr Patterson, proof of the substitutability of ULLS (namely that it is a “commercially viable” substitute) is established by the fact that an access seeker has installed a DSLAM in an exchange within the ESA.  Dr Patterson put it this way.  In those locations where a DSLAM has been installed, entry has not been blocked by entry barriers.  Those ESAs are, therefore, “effectively contestable”.  Hence the regulation of the LCS and the WLR service is no longer required.

112          Dr Patterson explained what he meant by an ESA being “effectively contestable”.  He acknowledged that the mere presence in an ESA of one competitor to Telstra would not provide competitive discipline on Telstra, absent regulation of the LCS and the WLR service.  Rather, the presence of an entrant indicates that barriers to entry and expansion for ULLS based competition are low.  This is how Dr Patterson put it:  “[T]he presence of one in-place competitor, having access to ULLS at cost-based prices, and having already demonstrated a capacity to serve the market, demonstrates the inevitability of constraint on Telstra’s retailing pricing behaviour at least as well as the availability of LCS/WLR”.  (We suspect that Dr Patterson does not really mean ‘inevitable’, for nothing in economics is inevitable.)  

113          To reach his view Dr Patterson looked at what he regarded as possible barriers to entry and expansion.  The potential barriers were the sunk costs of ULLS-based supply, MES considerations, technical constraints to providing a standard telephone service (STS), backhaul costs, and non-price impediments.  He found each to be a “low” barrier.

114          As regards the last potential barrier (non-price impediments) Dr Patterson said this: 

It might be argued that use of ULLS might be impeded due to non-price conduct on the part of Telstra – for example if Telstra might engage in quality degradation or delays in respect of supply of ULLS – adversely impacting the viability of ULLS competitors. 

I do not believe this to be a barrier to entry, since allegations of such practice could – and I anticipate would – be addressed through the anti-competitive conduct provisions of the [Trade Practice] Act, and damages recovered if Telstra was found to be in breach.


115          There are two observations that need to be made at this point concerning Dr Patterson’s report.  First of all, it is formulated directly on the theory of contestable markets.  What is surprising is that Dr Patterson did not take the trouble to discuss the theory and mention, and then attempt to deal with, the theory’s many critics.  He appears to have implicitly assumed that it is a theory that is accepted as an appropriate tool of analysis that can assist in the evaluation of any regulatory issue. The second observation is that in dealing with Telstra’s case, Dr Patterson did not identify all the potential barriers to entry and expansion.   

6 Merits of Telstra’s application

6.1 Barriers to ULLS-based competition

116          The economic literature discussing the telecommunications industry is replete with references to non-structural barriers to entry, such as the entrenched position of the incumbent (such as customer loyalty, brand recognition, inertia) and to strategic barriers including what is referred to as strategic entry deterrence, which is engaged in by an incumbent as a means of preventing entry or expansion.  By way of example, Telstra’s other expert, Professor Cave of the University of Warwick, has published a paper entitled ‘Encouraging infrastructure competition via the ladder of investment’ (2006) 30 Telecommunications Policy 223.  In that paper (which is referred to in his resume) he discusses the feasibility of broadband suppliers competing with the incumbent owner of a copper loop network.  Professor Cave says:  “The feasibility of this process has been controversial, with numerous accusations of obstruction, overcharging and sabotage by incumbents seeking to foreclose competition”. 

117          Not surprisingly, the ACCC identified four barriers that Dr Patterson missed.  They are: (a) an LSS to ULLS migration path; (b) capped exchanges; (c) queuing for access to an exchange; and (d) pair gain systems. 

118          The first concerns the migration of end-users from LSS-based services to ULLS-based services.  This can be a time-consuming process that can leave end-users without a broadband service for, in some cases, up to three weeks. 

119          Capping refers to an exchange in which it is not possible to deploy additional DSLAM equipment.  Telstra publishes a monthly list of capped exchanges entitled “TEBA Capped List” which classifies exchanges as main distribution frame (MDF) capped, racks capped, fully capped and potentially capped.  An MDF capped exchange is an exchange where there is no free block available for the access seeker to connect its equipment to the exchange’s MDF.  A racks capped exchange refers to an exchange with no floor space for the access seeker to install a rack to house its DSLAM equipment.  Where an exchange is racks capped, an access seeker may house its equipment outside the exchange and use an external interconnect cable (EIC) to connect its equipment to the exchange’s MDF.  (The use of an EIC is very much a second best option).  An exchange that is both racks and MDF capped is described as fully capped.  A potentially capped exchange is an exchange where room may be available only if work to extend the exchange’s capacity is carried out.  The scope of such work may include converting a non-equipment room into an equipment room, removing decommissioned equipment or upgrading an air conditioning plant.  Where Telstra requires an access seeker to finance such work, and the cost of that work exceeds the standard costs required for access the ACCC describes the exchange as ‘constructively capped’. 

120          Queuing is a term used to describe the substantial delays access seekers often face before they are able to install their equipment in Telstra’s exchange buildings.  An access seeker wanting access to an exchange must submit to Telstra a preliminary study report (PSR).  Access seekers face delays of between six to twelve months (and in some cases even longer) between the time of submitting a PSR, deploying their DSLAM equipment and conducting a joint completion inspection with Telstra.  

121          It is not clear why Dr Patterson failed to mention these three barriers.  When raised by the ACCC they were considered and then dismissed by Dr Patterson.  First of all, Dr Patterson said that he did not have the specific knowledge or technical expertise to comment upon the materiality of, and if material, the appropriate operational solutions to these potential impediments.  Dr Patterson then said that “if the ACCC has correctly identified material barriers to ULLS-based competition … [an] effective solution would be to address each of these issues directly through the Commission’s arbitral powers … rather than retain regulated LCS/WLR as an alternative to effective ULLS-based competition”.

122          For its part, the ACCC suggests that the better solution is to address the first three of these barriers by placing s 152AT(5) conditions or limitations on the grant of any exemption.  Briefly summarised, the conditions or limitations proposed by the ACCC are that the exemptions would not apply to: (a) the supply by Telstra of the LCS or WLR service to an access seeker who immediately prior to the commencement of the order used the LSS, LCS and WLR service to supply an end-user with a bundled fixed voice and broadband service until such time as Telstra developed and implemented an LSS to ULLS migration process that is satisfactory to the ACCC (the LSS to ULLS migration condition); (b) the supply of the LCS or WLR service to a queued access seeker (the queuing condition); and (c) a capped exchange, potentially capped exchange or a constructively capped exchange (the capping condition).

123          In addition to these three barriers there is the problem of pair gain.  Pair gain requires some explanation.  A pair gain system consists of an electronic box that permits a single line to service multiple end-users.  A prerequisite to the supply of ULLS is an unconditioned wire between its exchange and an end-user’s premises.  Where a pair gain system has been installed on the wire the prerequisite is not met. 

124          The number of SIOs affected by a pair gain system within the nominated ESAs is a significant percentage (approximately 7%) and may be regarded as constituting a physical barrier to entry.  Even accepting the suggestion in the statement of Mr Cooke, Telstra’s Principal Domain Expert-Access Wholesale and Regulatory, that the actual number of SIOs affected by a pair gain system might be reduced by approximately 30% by transpositioning the line to an unbroken copper path, the number remains significant.  Also, the number may increase if Telstra were to install additional large pair gain systems such as a remote integrated multiplexer which the statement of Mr Cooke suggests is typical of greenfields (new) estates. 

125          The physical barrier to entry posed by pair gain systems may be addressed in two ways.  First, as submitted by Telstra as an issue of MES and, as was suggested by the ACCC, addressed by way of limiting the order to ESAs with 14,000 or more addressable SIOs (ie SIOs connected to a Telstra exchange by an uninterrupted wire via which an end-user might be provided with an ULLS-based service).  The ACCC proposed an ESA with 14000 SIOs would support Telstra and four entrants.  This would provide the basis for effective competition in the downstream markets.  The second way is by way of a condition or limitation specifying that where an end-user cannot be supplied a voice service via ULLS then the exemption should not apply to that end-user. 

126          Another potential barrier that was in existence when the ACCC dealt with the applications was a proposal to roll out a fibre-to-the-node national broadband network (NBN).  In April 2008 the Federal Government released a request for proposals to roll out the NBN.  The request contemplated that the roll out would begin in January 2009 and be made progressively operational over five years.  If implemented, the NBN had the potential to render DSLAM technology redundant and strand an access seekers’ DSLAM investment.  Thus, it was perceived by some as a barrier.  There is now a new proposal for a super fast national fibre-to-the-home broadband network where 90 per cent of all Australian homes, schools and workplaces will have broadband services with speeds of up to 100 megabits per second.  Implementation of this new proposal has the same potential as the NBN.  The Tribunal is not permitted to have regard to the new proposal by reason of s 152AW(4).  It is required to assume that the now defunct proposal is still on the drawing board.  In the event, this will not affect the outcome.

6.2 Are exemptions in the long-term interests of end-users?

127          In considering whether it would be in the long-term interests of end-users to grant the exemptions sought the Tribunal will, of course, consider each of the objectives mentioned in s 152AB and, as part of that exercise, will also consider whether the imposition of conditions or limitations are needed to produce a future that would be likely to promote the long-term interests of end-users. 

128          Beginning with the promoting of competition objective, it is the Tribunal’s view that the starting point for deciding the extent to which a grant of the exemptions would be likely to result in the achievement of this objective, lies in the present state of affairs in each nominated ESA.  For example, if there is effective competition in an ESA at the current level of entry and potential entry it would be difficult to justify the continuance of access obligations to the WLR service and the LCS and equally unnecessary to impose conditions on the grant.  In other words, we would agree with Dr Patterson that “it is unnecessary to impose conditions … [if] ULLS-based competition is already effective at the current levels of entry [in ESAs]”.

129          That there should first be an analysis of the present state of affairs in the nominated ESAs is the approach which attracted itself to the ACCC.  Dr Patterson also regards it as the appropriate place to begin.  He referred to the ACCC’s approach and said this:  “In approaching its analysis of competitive conditions, the Commission notes that both actual competition and the potential for competition are relevant.  As a matter of principle, I strongly endorse this view.  As I note in my original and subsequent reports, it is my view that regulation should be withdrawn where conditions are evidentially conducive to competition, not just where competition has already emerged”.

130          Most of the information which provides details that give some indication of the state of rivalry in each nominated ESA comes from two sources:  (a) the Telstra Customer Access Network Record Keeping and Reporting Rules (CAN RKR); and (b) DSLAM tracker data.  The CAN RKR are rules (effective 1 September 2007) made by the ACCC under Part XIB Division 6 of the Act requiring quarterly reporting to the ACCC by Telstra of the take-up by access seekers of the ULLS and LSS.  The DSLAM tracker data is a longer-standing Telstra database designed to collate and analyse information about access seekers’ networks sourced from the access seekers’ websites and from reports of independent telecommunications market analysts.  While DSLAM tracker data might not be wholly reliable, it could be useful as a rough guide to trends in entry into the various ESAs.  The following information can be extracted from the two sources. 

131          The number of DSLAMs installed in the nominated ESAs can be summarised as follows:


Table 1


Number of Installed DSLAMs

























132          This information reveals the following trends within the nominated ESAs:  (a) between September 2005 and June 2006, DSLAM deployment grew by 58%; (b) between September 2007 and June 2007, DSLAM deployment grew by 28%; and (c) between September 2007 and June 2008, DSLAM deployment grew by 17%. 

133          The number of DSLAM competitors to Telstra in the nominated ESAs is summarised in the following table:

            Table 2


0 competitors

1 competitor

2 competitors

3 competitors

4 - 5 competitors

6 or more competitors
























































































From the above table it is possible to produce the following summary table: 

Table 3


2 or more competitors in an ESA

3 or more competitors in an ESA

4-5 or more competitors in an ESA

6 or more competitors in an ESA






























































134          There is now at least one DSLAM-operating competitor in each of the nominated ESAs.  The CAN RKR data show that the average number of DSLAM-operating competitors in the nominated ESAs has increased from 3.5 in September 2007 to 4.1 in June 2008.  The data also show that eight access seekers have expanded their DSLAM deployment within the nominated ESAs between September 2007 and June 2008 and that no access seeker has reduced its DSLAM deployment within the nominated ESAs during that period. 

135          The following information is available regarding the growth in the number of ESAs in which individual access seekers have installed DSLAM infrastructure in the nominated ESAs:


Table 4

Access Seeker





XYZED (Optus)





Chime (iiNet)

























Agile (Internode)








































Network Technologies















*The notation “[c-i-c]”, a common abbreviation for the phrase “commercial in confidence”, indicates that the information is confidential.  Table 4 in its completed form is held on the Tribunal’s file and may only be inspected with leave.

136          The growth in the number of entrants in the nominated ESAs tracks the following trend.  After initial entry by an access seeker, another DSLAM competitor entered an ESA within: (a) 3 months in 22% of the ESAs; (b) 9 months in 57% of the ESAs; (c) 12 months in 71% of the ESAs; and (d) 2 years in 95% of the ESAs.  Subsequent entry by a third access seeker or a greater number of DSLAM competitors occurred within:  (a) 12 months of initial entry in 29% of ESAs; (b) 18 months of initial entry in 59% of ESAs; and (c) two years of initial entry in 76% of ESAs.  As at June 2008, there were 46 ESAs with only one entrant competing with Telstra. 

137          The percentage of lines controlled by access seekers using ULLS in the nominated ESAs provides an indication of the market share that ULLS-based providers have captured from Tesltra.  It is useful to consider that information by reference to the percentage change of ULLS SIOs to Telstra PSTN SIOs in the Nominated ESAs, which is summarised in the following table:


Table 5







0 DLSAM competitors





1 DLSAM competitor





2 DLSAM competitors





3 DLSAM competitors





4 - 5 DLSAM competitors





6 or more DLSAM competitors





Average share in 380 ESAs






As at September 2007 the share of lines controlled by all access seekers using ULLS in the nominated ESAs was 5.3%.  This increased to 6.8% in December 2007, 8.0% in March 2008 and 9.4% in June 2008.   While this share has been increasing, the rate of increase over the three quarters after September was, respectively, 28.3%, 17.6% and 17.5%.  While growth over three quarters cannot be definitive of the long term trend, these figures are of some concern, as they could be interpreted as indicating that the rate of growth in the market share of access seekers using ULLS is slowing down.

138          Table 6, which has been produced from information provided by Telstra, gives the number of ESAs in which access seekers have a particular percentage of ULLS SIOs as a total of SIOs.

Table 6






0% to 5%





6% to 10%





11% t o 15%





16% to 20%





More than 20%











139          The ratio of ULLS SIOs to WLR SIOs in the nominated ESAs can be summarised as follows:

Table 7





0 DSLAM competitors




1 DSLAM competitor




2 DSLAM competitors




3 DSLAM competitors




4 - 5 DSLAM competitors




6 or more DSLAM competitors




Average share in 380 ESAs





As at May 2007 the number of the WLR SIOs was 1,188,606.  This number has decreased each month between May 2007 and March 2008, at which time the number of WLR SIOs was 928,850. From the figures in Table 7 the Tribunal discerns that there has been a strong decline in the number of WLR SIOs relative to ULLS SIOs within the nominated ESAs. 

140          As regards the physical capacity of entrants to take on a competitively significant market share, the Tribunal notes that as at 14 January 2008, the DSLAM infrastructure installed in 371 of the 380 nominated ESAs by ULLS and/or LSS access seekers was capable of servicing 2,483,673 lines.  Of those, 1,043,879 pairs were in use, leaving 1,439,794 lines available.  However, this information does not allow the Tribunal to determine the spare capacity of the installed DSLAMs in total or in any of the exchanges. The reason is as follows.

141          In order to provide voice functionality, voice port cards must be installed in the modular solution sub-racks in the DSLAM (in addition to digital subscriber line (DSL) port cards which provide the broadband service).  The number of cards that are needed is determined by the number of services being supplied using that DSLAM.  Each card contains a specific number of ports.  Each port in turn services one copper pair (or local loop).  The number of ports serviced by a card varies.  It follows that the number of spare lines alone says nothing about capacity. Capacity is also dependent on the capacity of the ports currently installed in the DSLAMs and the physical space available on the DSLAMs for the installation of additional cards.  The only detailed information that exists relates to Optus.  It has DSLAMs installed in [c-i-c] of the nominated ESAs and has: (a) spare capacity in [c-i-c] of these ESAs; (b) limited capacity in [c-i-c] of these ESAs; (c) no spare capacity in [c-i-c] of these ESAs; and (d) limited or no spare capacity in [c-i-c] of the ESAs where expansion is not possible.  (A complete version of this paragraph, which contains confidential information, is held on the Tribunal’s file and may only be inspected with leave).

142          Not all DSLAMs are technologically capable of providing broadband services and standard voice services within the same device. There is no evidence regarding the number of existing DSLAMs with DSL that are capable of being upgraded to deliver voice services. 

143          The precise cost of purchasing and installing DSLAM equipment and carrying out associated works is not clear. Dependent upon the configuration of the equipment (eg voice and broadband and number of services to be provided), the cost estimates (eg equipment, installation and other associated costs) range from $11,500 to $51,000.  Nonetheless there is material which suggests that an entrant could make a return on its investment within two years and recover its outlay within five years.

144          What conclusion is the Tribunal able to draw from this material?  First of all the material indicates that the cost of DSLAM equipment is not a prohibitive barrier to competitively significant entry. 

145          It is also reasonable to conclude, as the Tribunal previously concluded, that scale economies are not an impediment to entry provided there is a sufficient number of SIOs within an ESA.  The range of estimates concerning the number of SIOs an entrant with one DSLAM would need to attract in order to make entry worthwhile ranges from 30 to 360.  The likely explanation for the different views is that the number of end-users required to produce a reasonable return is subject to a variety of factors, including the magnitude of other fixed costs, the percentage of SIOs affected by pair gain systems, the percentage of SIOs on fixed term contracts, and the number of competitors within an exchange.

146          On the other side of the ledger, if, as Dr Patterson argues, ULLS is a substitute for WLR/LCS (Telstra contends that it is “undeniable that ULLS-based supply is superior to WLR/LCS-based supply”) one would expect to see new entrants that supply ULLS-based services taking out a greater share of the SIOs in most of the nominated ESAs.  Yet, while entrants have done well in a handful of ESAs (there are approximately 4 ESAs where the combined share of the entrants is over 20%), by and large they have not yet attracted large market shares away from Telstra, leaving it with significant market power (see Table 6).  

147          Why the disparity between Dr Patterson’s views and the facts on the ground?  The first point the Tribunal would highlight is that Dr Patterson’s application of contestable market theory (and notably that the existence of one entrant signifying the presence of low barriers to entry will result in a competitive market) does not hold true.  What we can say about Dr Patterson’s approach is that at best it offers only a very rough guide to competitiveness.  In the Tribunal’s view it would be dangerous to base important decision-making on the application of the contestable market theory. As its critics argue, it is an arid theory devoid of much practical relevance to markets in the real world. 

148          The second point is that it is clear that there exist significant barriers to entry and expansion that were not identified by Dr Patterson.  In addition to the barriers identified by the ACCC, including pair gain and the NBN, the Tribunal believes it is possible that there are other barriers that have not yet been carefully investigated.  What has happened is that those barriers which may be described as the “usual suspects” (eg sunk costs, scale economies, product differentiation, and switching costs) have been considered.  What has not been done is to adopt a more direct approach and look at the actual entry patterns and the extent of expansion to see what inferences might be drawn regarding other barriers to entry and expansion and their height.

149          In this connection what strikes the Tribunal as both a likely and substantial barrier is an end-user’s unwillingness to switch providers.  We do know that switching providers comes at a cost and that switching takes time.  Apart from cost, consumer inertia at switching is a consequence of other factors such as ignorance, customer loyalty, and concern about acquiring services from small players of unknown capacity, performance ability, financial stability and market longevity. 

6.3 The promoting competition objective

150          “Promoting competition” is typically achieved by increasing the number of firms serving a market or, more relevantly, is understood to mean increasing the degree of competition between existing players in the market through increasing the opportunities for interactive rivalry in all dimensions of the price-product-service package.  Any of these conditions should be manifested in an increase in the price and non-price rivalry of firms in the market.  For example, increased rivalry will likely increase the services offered by firms which are seen by end-users as offering close substitutes.  Another likely source of competition may be advances in technology.  In some cases new technology will improve efficiency and enhance the cost advantages of the incumbent.  In other cases it might facilitate small scale entry, or larger scale expansion. 

151          Telstra seeks to satisfy the promotion of competition criterion by reliance on Professor Cave’s ladder of investment hypothesis.  Professor Cave argues that it is desirable to encourage investment by new or potential entrants in the progressive acquisition of infrastructure, which will lead to new technology being used and competition being improved through facilities-based initiatives.

152          According to Professor Cave’s hypothesis, there are several rungs of the telecommunications market ladder:  (a) entry by reselling of an incumbent’s services; (b) the provision of some form of replicable or independent add-on capacity to the incumbent’s network; and (c) replication of the incumbent’s network facility (cf resale-based competition, access-based competition and full facilities-based competition).  Professor Cave’s idea is that entrants should be encouraged to ascend the ladder of investment – in effect creating a race among the competitors.

153          Professor Cave has explained how a regulator should implement the process of ascension up the ladder.  First there are the preparatory steps.  This involves identifying which of the “value chain products” are and which are not replicable: Professor Cave at 232.  Professor Cave says, correctly (at 232): “This first stage is critical to the calculations, and mistakes about the feasibility and desirability of competition will have lasting consequences”.  Having identified the various rungs in the ladder the following steps should be followed (Professor Cave at 233 - 234): 

Step 1: Rank replicable components of the value chain for relevant products by their ease of replicability … This involves evaluating empirical evidence or modelling of cost structures.

Step 2: Identify where on the ladder all firms (incumbents and entrants) are now located … Ideally entrants are encouraged to climb the ladder driven by both the attractiveness of the rungs above (relative to staying where they are) and by fear that the rung on which they are currently standing will be less comfortable.

Step 3: Having identified the rung in the ladder at which intervention should be focused, it is necessary to determine the likely investment potential of actual and potential entrants at that point – in other words their scope for progression over the period of intervention.

Step 4: Choose the mode of intervention [in this case the withdrawal of mandated access.] 

Step 5: Calibrate the intervention.

154          Professor Cave adds words of caution to the implementation of the ladder of investment theory.  He observes there is extensive economic literature which focuses upon the damage which might arise from mistaken intervention.  We agree.  He says (at 233) that “[c]learly, withdrawal of a mandated service, if undertaken before competitors’ assets were in place, would have very adverse effects”.  We would also add this: the withdrawal of a mandated service, if undertaken before competitors individually or collectively have established the critical mass at the next rung of the ladder that gives them the ability to compete effectively with the incumbent, would also have very adverse effects on the promotion of competition.

155          In the Tribunal’s view, it is likely to be in the long-term interests of end-users if exemptions are granted along the lines suggested by Professor Cave provided certain conditions and limitations are imposed.  The first set of conditions are those proposed by the ACCC.  True it is that Dr Patterson (and Telstra) contend that if queuing, capping and migration from LSS to ULLS are a problem then they should be dealt with by application of the Act’s relevant arbitral provisions.  The difficulty with a laissez faire attitude to problems such as these is that the arbitral provisions are slow, expensive and often problematic.  If conditions along the lines proposed by the ACCC are imposed, that provides an immediate and efficient method of dealing with those barriers.  Through the proposed conditions the barriers are either removed or de-regulation does not come into effect.

156          The same approach should be applied to pair gain systems.  Having regard to the significant number of SIOs that are, and may be, affected by pair gain systems, the Tribunal is not satisfied that it would be in the long-term interests of end-users for the matter to be addressed simply as an MES issue.  It is appropriate that there be a condition to the effect that the exemptions do not apply to an SIO in respect of which an end-user cannot be supplied by way of the ULLS. 

157          In the Tribunal’s view, it is also necessary by an appropriate condition to ensure that immediately prior to deregulation (the denial of regulated access to WLR/LCS): (a) there are a sufficient number of access seekers who can supply services through the ULLS to provide a competitive restraint on the incumbent (Telstra) in its supply of services, including the supply of WLR/LCS; and (b) their position in the market (ie in each nominated ESA) is sufficiently consolidated so that it is likely that if deregulation is ordered, the entrants will undertake the necessary investment, so that ULLS-based supply will constrain the actions of Telstra. 

158          Put another way, to be satisfied that the removal of a rung (regulated access to WLR/LCS for resale) is likely to promote competition the Tribunal must be satisfied that entrants are likely to climb the ladder to the next rung, and not simply exit the market.  If these firms have developed customer bases thereby gaining a sound commercial reputation, the risk of exit is reduced.  Moreover, as their customer bases are built up their costs will be lowered and their capacity to compete will increase.  This will also reduce the risk of exit. 

159          In any event, competition is likely to be promoted (and efficiencies in investment encouraged) if deregulation takes place in a market where the Tribunal is satisfied that an entrant or small current player has taken, or has the physical capacity and willingness to take, market share from the large or dominant incumbent, by offering end-users a better price-product-service package. 

160          The position of entrants will be sufficiently strengthened and will likely provide competitive constraint on Telstra if they have either taken from Telstra a competitively significant percentage (at least 30 per cent) of addressable SIOs in each ESA or have the installed capacity to take that percentage.  The condition we have in mind will be to that effect.  This approach follows some of the thinking of other regulators.  For example Ofcom, the UK telecommunications regulator, has adopted the position that ex ante regulation should be removed in an ESA where there are four or more competitors (including the incumbent) and where no single firm has significant market power.  In Canada the regulator will remove regulation if in addition to the incumbent there are two other independent facilities-based service providers that are capable of serving 75 per cent of the SIOs that the incumbent is capable of servicing.  The Tribunal’s approach differs from that taken in the UK and Canada because it is not proposed to wait until Telstra loses market power, an event unlikely to occur.  The reason is that all the Tribunal is required to be satisfied about is that it is “likely” that competition will be “promoted”: it is not necessary to find that competition “will” be enhanced.

161          The importance of this issue cannot be underestimated.  Unless there is in existence a state of affairs in which it is likely that entrants (and potential entrants) will constrain Telstra, the grant of the exemptions sought will be positively contrary to the long-term interests of end-users.  The Tribunal appreciates that Telstra believes ULLS-based technology is superior to that based on WLR/LCS.  That, however, is of little concern to the Tribunal.  It is not the function of the Tribunal to make a choice between technologies and between competing goods and services based on their quality (or on any other factor).  Those choices are made by consumers.  But, while the consumer makes that choice, they benefit from the availability of both old and new technologies or old and new products and services.  Competition between old and new lowers the production costs of both.  Product quality and performance are also improved and choices are broadened.

162          In formulating the additional conditions which will produce market conditions that are likely to be in the long-term interests of end-users, the Tribunal believes it is acting in accordance with the dictate of the Full Court which in its reasons said (Telstra Corporation Limited at [150]):  “What the [decision-maker] must do on an application [for an exemption] is to consider whether it should make an order … and, in doing so, must at all times keep in mind whether the order could be made if appropriate conditions and limitations were imposed.”  There is, however, a limit on how far the Tribunal will go in imposing conditions that have not been suggested by the parties.  At one extreme the Tribunal is always able to formulate conditions for an exemption order which would ensure (if the conditions were satisfied) a competitive market in the future.  All the Tribunal need do is pick up the elements of the accepted models of competition and translate them into conditions or limitations to be attached to an exemption order.  That, of course, would be an absurd exercise of power because of the likelihood that many of the conditions would never be satisfied.  A more reasonable regime is to impose un-requested conditions or limitations only in those circumstances where, provided the un-requested condition or limitation comes to its mind, the Tribunal is of opinion that there is a real possibility it may be satisfied.  Usually one would expect the relevant condition or limitation to be suggested by a party.  But that will not always happen and the Tribunal believes that there is no reason why it should not fill the void. 

163          One last condition must be mentioned.  It concerns when the exemptions are to come into effect.  The ACCC in its initial orders allowed for a 12 month transition period to enable current resellers of LCS and the WLR service to adjust their affairs to the new situation.  The Tribunal thinks this is a reasonable approach.  In view of the uncertainty likely to have resulted by reason of the applications to review the ACCC’s orders, the Tribunal thinks it best that it should impose a similar 12 month period and that the period is to begin with the making of the orders.

6.4 The any-to-any connectivity object

164          The second objective, any-to-any connectivity is not an issue, except to the extent that the absence of an LSS to ULLS migration path may mean an end-user may be without a data service (ie unconnected) for up to three weeks.   The Tribunal is satisfied that the objective is as likely to be achieved in the future without the exemption as it is in the future with the exemption.  To the extent that the absence of an LSS to ULLS migration path may come within s 152AB(2)(d), it is dealt with by one of the conditions suggested by the ACCC. 

6.5 The efficient investment objective

165          Last, there is the efficient investment objective.  The Tribunal is of opinion, as it has explained in some detail, that if competition is promoted then, in a case such as this, efficient investment is encouraged.  That is to say, promoting competition in an ESA will, ipso facto, encourage efficient investment by encouraging access seekers to invest in ULLS-based DSLAM infrastructure.  It is only to this extent that the Tribunal goes along with the principles of Professor Cave’s ladder of investment hypothesis.

7 Conclusion

166          Exemption orders, with several conditions and limitations, will be made.   

167          In accordance with the advice given to the parties, in the first instance the reasons for making the orders were published on a confidential basis.  The parties were asked to consider which portions, if any, should be removed for reasons of confidentiality.  The Tribunal requested the parties to keep to a minimum any request for confidentiality.  It was only information the publication of which would harm a business that would be removed.  The reasons which are now made public have the confidential portions removed.

168          The Tribunal also advised the parties that they would be given an opportunity to speak to the terms of the conditions and limitations which the Tribunal proposes to impose, as some were not raised during the hearing.  It was pointed out that the parties should not consider this indulgence to constitute permission to make substantive submissions.  Rather, what the Tribunal had in mind was for the parties to:  (a) point out what difficulties, if any, may arise if the proposed conditions and limitations were imposed; and (b) make comments about drafting. 

I certify that the preceding one hundred and sixty eight (168) numbered paragraphs are a true copy of the Reasons for Determination of the Australian Competition Tribunal.


Dated:         27 May 2009

Counsel for the Applicant:

Mr N J O’Bryan SC

Mr M J Hoyne



Solicitor for the Applicant:

Herbert Geer



Counsel for Telstra Corporation:

Dr J Griffiths SC

Ms M N Allars



Solicitor for Telstra Corporation:

Mallesons Stephen Jacques



Counsel for the Australian Competition and Consumer Commission:

Mr C Caleo SC

Mr P Gray



Solicitor for the Australian Competition and Consumer Commission

DLA Phillips Fox



Date of Hearing:

30 March 2009 – 31 March 2009



Date of Determination:

27 May 2009