AUSTRALIAN COMPETITION TRIBUNAL

Applications by Telstra Corporation Limited and TPG Telecom Limited [2023] ACompT 1

IN THE AUSTRALIAN COMPETITION TRIBUNAL

DETERMINATION

THE TRIBUNAL DETERMINES AND DIRECTS THAT:

1.    The Joint Application for Further Directions and Issuing of Summons dated 24 February 2023 be dismissed.

2.    Pursuant to s 102(6) of the Competition and Consumer Act 2010 (Cth), the Australian Competition and Consumer Commission (ACCC) is required to furnish to the Tribunal a copy of the model used by the ACCC to undertake the modelling referred to at [9.132]and [9.133] of Merger Authorisation Determination MA1000021.

REASONS FOR DETERMINATION

THE TRIBUNAL:

A.    Introduction

1    On 23 May 2022, Telstra Corporation Limited (Telstra) and TPG Telecom Limited (TPG) lodged an application with the Australian Competition and Consumer Commission (ACCC) seeking authorisation under s 88(1) of the Competition and Consumer Act 2010 (Cth) (CCA) for Telstra to operate radiocommunications devices under TPG’s spectrum licences pursuant to the terms of an agreement entered into between them dated 17 February 2022 and titled Spectrum Authorisation Agreement – MOCN Area (Spectrum Authorisation Agreement).

2    The application for authorisation discloses that the Spectrum Authorisation Agreement is one of three agreements entered into between Telstra and TPG as part of the one commercial transaction seeking to establish a Multi-Operator Core Network (MOCN) in certain regional and urban fringe areas which comprise around 17% of the Australian population coverage (in the 81.4%-98.8% population coverage area) (Regional Coverage Zone). The other two agreements are the MOCN Service Agreement dated 17 February 2022 and the Mobile Site Transition Agreement dated 17 February 2022. The application is clear, however, and Telstra and TPG have acknowledged in this proceeding, that the application for authorisation is confined to conduct comprising Telstra’s use of TPG’s spectrum licences pursuant to the Spectrum Authorisation Agreement.

3    On 21 December 2022, the ACCC made a determination refusing the application for authorisation from Telstra and TPG.

4    On 23 December 2022, each of Telstra and TPG (collectively, the applicants) filed an application in the Tribunal pursuant to s 101 of the CCA for a review of the ACCC’s determination. On 24 January 2023, the Tribunal made a direction pursuant to s 109(2) of the CCA permitting Singtel Optus Pty Ltd (Optus) to intervene in this proceeding.

5    It is common ground between the parties that the application for authorisation filed by the applicants is a “merger authorisation” within the meaning of the CCA. Section 4 of the CCA gives the following definition:

merger authorisation means an authorisation that:

(a)     is an authorisation for a person to engage in conduct to which section 50 or 50A would or might apply; but

(b)     is not an authorisation for a person to engage in conduct to which any provision of Part IV other than section 50 or 50A would or might apply.

6    Section 68(1) of the Radiocommunications Act 1992 (Cth) provides that the licensee of a spectrum licence may authorise other persons to operate radiocommunications devices under the licence. Section 68A(1) provides that, for the purposes of s 50 of the CCA (and related provisions), the authorisation under s 68(1) of a person to operate radiocommunications devices under a spectrum licence is taken to be an acquisition by the person of an asset of another person and conduct engaged in by the person.

7    As a result of those provisions, Telstra’s use of TPG’s spectrum licences pursuant to the terms of the Spectrum Authorisation Agreement is taken to be an acquisition of an asset for the purposes of s 50 of the CCA. As noted above, the application for authorisation is confined to that conduct and, accordingly, both limbs of the definition of “merger authorisation” are satisfied.

8    A review by the Tribunal of authorisation determinations made by the ACCC is governed by the provisions of Pt IX of the CCA. The statutory framework governing the grant of authorisations by the ACCC under Pt VII of the Act, and the review by the Tribunal of ACCC authorisation determinations under Pt IX of the Act, were amended in material ways by the Competition and Consumer Amendment (Competition Policy Review) Act 2017 (Cth) (2017 Amendment Act). While many aspects of the pre-existing statutory framework governing authorisations were maintained, new statutory requirements were introduced with respect to the review by the Tribunal of merger authorisation determinations. This is the first occasion on which those new statutory requirements have been the subject of consideration by the Tribunal.

9    As discussed in more detail below, a review of a merger authorisation under Pt IX differs from a review of other authorisations in two material ways:

10    With respect to the statutory time period for the review, broadly stated a review of a merger authorisation is required to be completed within 90 days. However, under s 102(1AD), the Tribunal may determine in writing that the matter cannot be dealt with properly within the initial period, either because of its complexity or because of other special circumstances, and that an extended period applies for the review, which consists of the initial period and a further specified period of not more than 90 days. On 31 January 2023, the Tribunal made a determination in writing to that effect such that the period of the present review is 180 days (which ends on 21 June 2023).

11    On 24 February 2023, the applicants filed a joint application seeking directions from the Tribunal that would authorise additional evidence being received by the Tribunal on the review. The applicants sought the following directions:

Optus correspondence and modelling

1     The Applicants seek a direction from the Tribunal pursuant to r 22(1)(a) of the Competition and Consumer Regulations 2010 (Cth) (Regulations) that, on or before 5pm on 3 March 2023, Singtel Optus Pty Limited (Optus) file and serve on the ACCC and the Applicants the following documents, in accordance with the Confidentiality Regime and to the extent that such documents have not previously been produced to the ACCC and the Applicants:

(a)     All electronic mail transmissions (including attachments) sent or received during the period from 21 February 2022 to 21 July 2022 (inclusive) by any of:

i.     Kelly Bayer Rosmarin – Chief Executive Officer, Optus;

ii.     Andrew Sheridan – Vice President, Regulatory & Public Affairs, Optus; and

iii.     Benjamin White – Managing Director of Wholesale & Strategy, and Chief Operating Officer of Enterprise & Business,

that refer to the Proposed Transaction or that were in connection with, or that refer to, the Optus business case modelling referred to at paragraph 152 of the statement of Mr White dated 19 October 2022 and annexed at Tab 63 - Exhibit BW-C1 (with document ID 71760.006.019.0873) (Business Case Modelling); and

(b)     all versions of the Business Case Modelling, including all drafts.

Further questions for Optus witnesses

2     The Applicants request that the Tribunal issue a summons under s 105(2) of the Competition and Consumer Act 2010 (CCA) to each of the following individuals to attend in person at a time to be scheduled during the hearing of this matter to answer questions that will assist the Tribunal to clarify information, documents or evidence before it pursuant to s 102(7) of the CCA:

(a)     Kelly Bayer Rosmarin, Chief Executive Officer, Optus

(b)     Benjamin White, Managing Director, Wholesale & Strategy, Optus

(c)     Kanagaratnam Lambotharan, Vice President of Networks, Optus

Further report of Dr Jorge Padilla

3     The Applicants seek a direction pursuant to r 22(1) of the Regulations and s 102(10)(d) of the CCA, or alternatively ss 102(9) and 102(10)(e) of the CCA, that on or before 24 March 2023 TPG file and serve an independent expert report of Dr Jorge Padilla not exceeding 10 pages in length which identifies and explains the extent to which the outcome of Dr Padilla’s modelling (recorded in his expert report provided to the ACCC at Annexure E to the Applicants’ submission in response to Statement of Preliminary Views, 2 November 2022) of the likely effect of the Proposed Transaction on Optus’ 5G investment incentives is affected by adopting:

(a)     the assumptions identified in paragraph [9.132] of the ACCC’s Reasons for Determination; and

(b)     the following assumptions:

i.     [Confidential to Optus]

ii.     [Confidential to Optus]

iii.     [Confidential to Optus]

iv.     Any reasonable assumptions adopted by Optus in the modelling that it produced to the ACCC in relation to the Authorisation Application or pursuant to any future direction of the Tribunal which could materially impact upon the outcome of Dr Padilla’s modelling.

12    The joint application was supported by an affidavit sworn on 24 February 2023 by Andrew Herbert John Korbel, a partner at Corrs Chambers Westgarth, the solicitors for TPG, and by an affidavit sworn on 27 February 2023 by Simon John Muys, a partner at Gilbert + Tobin, the solicitors for Telstra. Each of Telstra and TPG filed submissions in support of the application dated 10 March 2023.

13    The joint application was opposed by Optus and the ACCC. Optus relied on an affidavit sworn on 8 March 2023 by Linda Catherine Evans, a partner at Herbert Smith Freehills, the solicitors for Optus, and written submissions dated 13 March 2023. The ACCC relied on written submissions dated 14 March 2023.

14    The Tribunal heard the joint application on 15 March 2023 and reserved its decision. At the hearing, the parties indicated that they had no objection to the Tribunal making a determination on the application and publishing reasons subsequently. On 17 March 2023, the Tribunal made a determination dismissing the joint application, but also made a direction pursuant to s 102(6) requiring the ACCC to furnish to the Tribunal a copy of the model used by the ACCC to undertake the modelling referred to at [9.132] and [9.133] of its authorisation determination. A copy of that model was produced by the ACCC to the Tribunal and, subsequently, a copy was made available to the parties.

15    These are the Tribunal’s reasons for making that determination and that direction.

B.    Background to the joint application

The Proposed Transaction

16    As disclosed in their applications for authorisation submitted to the ACCC, on 21 February 2022 Telstra and TPG entered into the following related commercial agreements:

collectively referred to by the applicants as the Proposed Transaction.

17    The agreements seek to establish a Multi-Operator Core Network (referred to above using the initialism MOCN) pursuant to which Telstra will share its Radio Access Network (RAN) with TPG and supply 4G and 5G services in the Regional Coverage Zone. TPG will use the MOCN services for its 4G and 5G coverage in the Regional Coverage Zone as part of its retail and wholesale services. Under the Spectrum Authorisation Agreement, TPG will authorise Telstra to use certain spectrum in the Regional Coverage Zone that TPG currently owns. TPG will also transfer up to 169 of its existing mobile sites (which refers to active equipment which is located on third party towers, poles or rooftops) in the Regional Coverage Zone to Telstra and intends to decommission the remainder.

18    The initial term of the MOCN Service Agreement is 10 years and TPG has two options to extend the agreement by 5 years. The Spectrum Authorisation Agreement may continue after expiry or termination of the MOCN Service Agreement unless terminated by Telstra or TPG.

19    Telstra and TPG will continue to operate their own mobile core networks in the Regional Coverage Zone. They will also continue to operate their own networks in metropolitan areas where around 81.4% of Australia’s population resides. The agreement will not enable TPG to use Telstra's network in remote areas beyond the Regional Coverage Zone. Telstra will remain as the only provider with coverage in those areas servicing an additional 0.7% (up to 99.5%) of the population. Very remote areas, in which 0.5% of the population resides, have no mobile coverage.

The ACCC Determination

20    On 21 December 2022, the ACCC made a determination refusing to grant authorisation for Telstra to operate radiocommunications devices under TPG’s spectrum licences pursuant to the terms of the Spectrum Authorisation Agreement (being the conduct for which authorisation was sought). The ACCC concluded that (at [1.5] of its determination):

The ACCC is not satisfied, in all the circumstances, that the Proposed Transaction would not be likely to substantially lessen competition, or would be likely to result in a benefit to the public that would outweigh the public detriment from the Proposed Transaction. Therefore, the ACCC must not make a determination granting authorisation to the Proposed Transaction under section 88(1) of the Act.

21    The ACCC reached its conclusion based on the likely competitive effects, public benefits and public detriments resulting from the Proposed Transaction as a whole rather than those resulting from the Spectrum Authorisation Agreement (the conduct for which authorisation was sought). The correctness of the ACCC’s approach in that regard will need to be examined as part of the Tribunal’s review of the ACCC’s determination.

22    For present purposes, it is necessary to have regard to only one aspect of the ACCC’s reasons for its determination which provides the context for the joint application. That aspect concerns the information given by Optus to the ACCC about its current business strategy with respect to the Regional Coverage Zone, including its investment incentives, and the likely effect of the Proposed Transaction on its business strategy and investment incentives. It is important to emphasise that the ACCC’s conclusions with respect to Optus’s business strategy and investment incentives is only one element of the ACCC’s overall analysis of the likely competitive effects, public benefits and public detriments resulting from the Proposed Transaction. Nevertheless, the Tribunal accepts that that element was a material factor in the ACCC’s ultimate determination.

23    It is convenient to note the following matters recorded in the executive summary to the ACCC’s reasons for its determination:

24    The above conclusions are elaborated in chapter 9 of the ACCC’s reasons for determination which discusses the likely competitive effects of the Proposed Transaction in detail. The chapter includes a description of submissions made by interested parties and, in that context, summarises the evidence and submissions provided by Optus to the ACCC (see at [9.37] to [9.65]). The chapter also makes findings, based on the foregoing evidence and submissions, with respect to the impact of the Proposed Transaction on Optus’s incentives to invest in its network (see at [9.118] to [9.142]). Both of these parts of the ACCC’s reasons are redacted for confidentiality. The Tribunal is mindful of the existing confidentiality restrictions in providing these reasons for its determination on the joint application. Nevertheless, the following conclusions reached by the ACCC are not subject to confidentiality restrictions:

C.    Evidence and submissions on the joint application

25    As noted earlier, each of the parties filed evidence and submissions in respect of the joint application. That evidence is summarised below, together with the parties’ submissions to the extent the submissions addressed the factual issues arising on the application.

26    The parties’ submissions also addressed the statutory framework which governs this proceeding, and specifically the statutory restrictions on the information, documents and evidence that may be taken into account by the Tribunal on a review of a merger authorisation. The ACCC also filed submissions addressing those matters. Those submissions are addressed in section D below.

Telstra’s evidence and submissions

27    Mr Muys’s affidavit, filed on behalf of Telstra in support of the joint application, addressed paragraphs 1 and 2 of that application.

28    Mr Muys provided a chronology of submissions and evidence provided by Optus to the ACCC in connection with the authorisation application. Relevantly, this included:

29    Mr Muys deposed that he has examined the documents produced by Optus to the ACCC pursuant to the s 155 notice and expressed the opinions that: (i) an unusually small number of relevant documents had been produced; (ii) the s 155 notice had been narrowly framed; and (iii) as a consequence, the internal processes by which Optus developed its strategic modelling and commercial analysis in response to the announcement of the Proposed Transaction have not been able to be thoroughly assessed or tested. Mr Muys deposed that the purpose of paragraph 1 of the joint application is to “test and clarify the 5G investment plans, cost modelling and other strategic documents prepared and relied upon by Optus witnesses, or relied on in Optus submissions and evidence provided to the ACCC”.

30    Mr Muys further deposed that he has read the witness statements and transcripts of examination of Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam. Mr Muys deposed that the purpose of paragraph 2 of the joint application is to enable the applicants to question Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam in relation to the following topics:

31    Mr Muys expressed the opinion that “additional questions would be likely to assist to clarify evidence that is currently before the Tribunal, either because those questions were not put to witnesses in those examinations, or because they would test or clarify answers provided during those interviews”.

32    Telstra’s submissions were largely based on Mr Muys’s evidence. Telstra submitted that a salient issue in dispute between the parties is whether the Proposed Transaction is likely to affect negatively Optus’s investment in 5G infrastructure in the Regional Coverage Zone. Telstra contends that the business case modelling underpinning Optus’s commercial assessment of the effect of the Proposed Transaction on its future investment is contrived or otherwise unreliable.

33    In relation to paragraph 1 of the joint application, Telstra submitted that the ACCC’s s 155 notice issued to Optus produced very few documents referring to the Proposed Transaction or Optus’s business case modelling, which appears to be a function of the framing of the s 155 notice. Telstra submitted that it is likely that key documents evidencing the process and motivations that led to Optus’s commercial assessment and modelling in response to the Proposed Transaction are not before the Tribunal, and that such material would be centrally relevant to determining whether Optus’s assessment and modelling was contrived, unreliable or otherwise commercially irrational.

34    In relation to paragraph 2 of the joint application, Telstra submitted that, in the ACCC determination process, Optus provided witness statements from six senior executives including Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam who gave evidence about Optus’s network investment plans before and after the Proposed Transaction was announced and Optus’s commercial assessment in response. Telstra submitted that, although the ACCC compulsorily examined Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam under s 155(1)(c) of the CCA, in many instances the ACCC did not test or challenge their evidence. Further, there was no opportunity for Telstra or TPG to test or respond to this evidence while the matter was before the ACCC, because they were not privy to the evidence given under compulsory examination.

TPG’s evidence and submissions

35    Mr Korbel’s affidavit, filed on behalf of TPG in support of the joint application, addressed paragraph 3 of that application.

36    Mr Korbel deposed that, for the purposes of the authorisation application, TPG retained Dr Jorge Padilla, an expert economist, and submitted three reports from Dr Padilla to the ACCC. Mr Korbel referred to that part of the ACCC’s reasons for determination that discusses Dr Padilla’s modelling of Optus’s investment incentives with respect to its 5G network (at [9.128]), including the assumptions made by Dr Padilla with respect to such matters as Optus's costs of deploying 2,500 more sites, the number of subscribers Optus would lose in different areas of the country if it did not make any further investment and the margin that would be lost by Optus on those subscribers. Mr Korbel deposed that, due to confidentiality restrictions imposed by Optus, assumptions that underpinned Optus’s 5G business case were not made available to Dr Padilla. In the present proceeding, Dr Padilla has now signed a confidentiality undertaking and been provided with that information. Dr Padilla has undertaken further modelling of Optus’s investment incentives with respect to its 5G network. Mr Korbel deposed that Dr Padilla would be willing to prepare a short report detailing his findings of that further modelling. However, as at the time of the hearing, the proposed report was not available for the Tribunal to consider.

37    TPG’s submissions supported Telstra’s submissions with respect to paragraphs 1 and 2 of the joint application. With respect to Optus’s business case modelling, TPG submitted that there are cogent reasons to question the reliability of the modelling and to think that its content (including its assumptions) may have been influenced by the circumstances in which it was prepared (in opposition to the authorisation application). TPG further submitted that, before the Tribunal reaches any firm views about the reliability or probative value of the business case modelling or the impacts of the Proposed Transaction on Optus’s 5G business case and incentives, it would be reasonable and appropriate to clarify how and why the assumptions and inputs used in that modelling changed over time.

38    In relation to paragraph 3 of the joint application, TPG submitted that the ACCC subjected Dr Padilla’s modelling to modifications that were not put to Dr Padilla. Specifically, the ACCC modified Dr Padilla’s modelling by substituting three assumptions provided by Optus (two of which were modified further by the ACCC) for three assumptions used by Dr Padilla. The ACCC concluded that the result of changing these three assumptions, while holding all other assumptions in Dr Padilla’s model constant, would cause the net present value of Optus investing in a 5G network in regional Australia to become negative (ACCC’s reasons at [9.133]). TPG submitted that the ACCC did not disclose its own modelling or reasoning in support of that conclusion. Further, the ACCC did not analyse, or if so did not disclose, what the outcome would be of Dr Padilla’s modelling if other aspects of the Optus’s business case modelling were incorporated in place of assumptions by Dr Padilla (or the ACCC). TPG argued that the result of the ACCC’s analysis was a curious mixture of assumptions, some based on the ACCC’s modification of Optus’s views, others based on Dr Padilla’s reports (prepared without access to Optus’s views). TPG submitted that it is unsatisfactory for the Tribunal to be in a position where the ACCC will presumably seek to rely on [9.133] of the ACCC’s reasons, when Dr Padilla has never had an opportunity to address that analysis. For these reasons, it is reasonable and appropriate that the Tribunal seek a further report from Dr Padilla for the sole purpose of clarifying the evidence he has given, and specifically, the impact on his evidence of the ACCC and Optus’s assumptions.

Optus’s evidence and submissions

39    Ms Evans’s affidavit, filed on behalf of Optus in opposition to the joint application, addressed paragraphs 1 and 2 of that application. Ms Evans described the extent of the questions asked of Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam by the ACCC during their respective s 155 examinations, particularly in relation to Optus’s investment incentives if the Proposed Transaction were to proceed, and the extent of the business documents produced by Optus to the ACCC pursuant to s 155 notices issued by the ACCC and separately. Ms Evans also described the extent to which the submissions and evidence of Optus had been made available to the applicants during the authorisation process.

40    In relation to paragraph 1 of the joint application, Optus submitted that the evidence adduced by the applicants does not establish that the investigations undertaken by the ACCC were narrow or inadequate or that there is a significant gap in the documentary evidence. Optus argued that the serious allegation that the ACCC did not thoroughly assess Optus’s evidence rises no higher than assertion by disappointed applicants.

41    In relation to paragraph 2 of the joint application, Optus submitted that the applicants have not attempted to identify any specific ambiguity in the witness statements provided by Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam that requires clarification, and the applicants have not attempted to identify any specific question that the Tribunal could ask the witnesses in order to clarify any specific matter. Rather, the proposed questioning would turn the review into a re-hearing of the likely effect of the Proposed Transaction on Optus’s investment incentives and the likely TPG counterfactual.

42    In relation to paragraph 3 of the joint application, Optus submitted that any new report from Dr Padilla will be of limited assistance to the Tribunal given the constrained question to which it is directed: Dr Padilla’s proposed modelling and analysis is intended to estimate the net present value to Optus of it continuing to invest in a regional 5G rollout, but does not attempt to model the value of alternative investments that Optus might undertake. Optus further submitted that the applicants have chosen to make the application to adduce a further expert report without providing the proposed report to the Tribunal and the parties. As such, the Tribunal can only assess the application on a theoretical basis, which creates the potential for prejudice to Optus because the full implications of the further evidence (and whether responsive evidence might be required) cannot be assessed.

Conclusions with respect to the evidence

43    To the extent it is relevant, the Tribunal is not persuaded by the evidence adduced on this application that the ACCC failed to make all due enquiries and obtain relevant information and documents with respect to the likely effect of the Proposed Transaction on Optus’s business strategy and investment incentives. To the contrary, the evidence shows that, in the course of its consideration of the authorisation application, the ACCC gave careful consideration to the submissions and evidence provided by Optus and sought to verify and test that material.

44    More relevantly, the Tribunal considers that the evidence adduced by the applicants in respect of the joint application has not identified any aspect of the information, documents and evidence given to the ACCC that is unclear or unintelligible and requires clarification. Instead, the evidence establishes that, by the joint application, the applicants are seeking an opportunity in this review proceeding to test or challenge the submissions and evidence given to the ACCC by Optus. It will be necessary to consider whether the statutory framework governing this review permits the Tribunal to receive additional material for that purpose.

D.    STATUTORY FRAMEWORK FOR THE TRIBUNAL’S REVIEW

Overview

45    As noted above, the statutory framework governing the grant of authorisations by the ACCC under Pt VII of the Act, and the review by the Tribunal of ACCC authorisation determinations under Pt IX of the Act, were amended in material ways by the 2017 Amendment Act. The present application requires consideration of the amendments relating to merger authorisations (as defined in the CCA), and specifically the amendments that impose restrictions on the information, documents and evidence to which the Tribunal may have regard in conducting a review of a merger authorisation determination made by the ACCC. As this is the first occasion on which the new statutory requirements governing such a review have been the subject of consideration by the Tribunal, it is helpful to begin with an outline of the relevant legislative history.

Legislative history

46    The Explanatory Memorandum to the enacting Bill explained that the 2017 Amendment Act represented the Government’s response to the recommendations of the Competition Policy Review that delivered its final report on 31 March 2015 (referred to in the Explanatory Memorandum as the Harper Review).

47    Chapter 9 of the Explanatory Memorandum concerned proposed amendments governing authorisations, notifications and class exemptions. In relation to authorisations generally, the Explanatory Memorandum noted (at [9.3] and [9.4]):

Simplification

9.3    The Harper Review considered that the authorisations and notifications provisions were unnecessarily complex, generating excessive regulatory and administrative costs and creating a focus on technicalities over issues of substance.

9.4     The Harper Review recommended two principal changes to simplify the authorisations and notifications provisions:

•    ensuring that only a single authorisation application is required for a single business arrangement or transaction; and

•    empowering the Commission to grant authorisation on the basis that the conduct would not be likely to substantially lessen competition.

48    In relation to merger authorisations, the Explanatory Memorandum noted (at [9.5] to [9.8]):

Mergers

9.5     Submissions to the Harper Review raised concerns about the Commission’s formal merger clearance process and the merger authorisation processes undertaken by the Tribunal. A merger clearance can only be granted if the Commission is satisfied that the merger will not substantially lessen competition. A merger authorisation can only be granted if the Tribunal is satisfied that there will be net public benefits from the merger.

9.6     The Harper Review noted that the formal clearance process has not been used since it was introduced in 2007, and that the merger authorisation process has been used only a few times since it was reformed in 2007.

9.7     Unlike authorisations for other conduct prohibited under Part IV, the Commission is not currently the decision-maker at first instance for merger authorisations. Instead, the Tribunal makes the decision at first instance and there is no avenue for review of these decisions other than seeking judicial review by the Federal Court.

9.8     The Harper Review recommended combining the formal clearance process with the merger authorisation process to create a single, streamlined authorisation process with the following features:

•    the Commission should be the decision-maker at first instance (as it is better suited to undertaking investigations);

•    the Commission should be empowered to authorise a merger if satisfied the merger would not substantially lessen competition or would result, or be likely to result, in a net public benefit;

•    the formal process should not be subject to prescriptive information requirements, but the Commission should be empowered to require the production of business and market information;

•    the formal process should be subject to strict timelines that cannot be extended except with the consent of the merger parties;

•    decisions of the Commission should be subject to review by the Tribunal under a process that is also governed by strict timelines; and

•    the review by the Tribunal should be based upon the material that was before the Commission, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied there is sufficient reason.

49    The Explanatory Memorandum explained that: the 2017 Amendment Act simplified the various authorisation provisions into a single authorisation provision that allows the ACCC to authorise conduct that would otherwise be prohibited under Pt IV (at [9.13]); the 2017 Amendment Act also repealed the formal merger clearance and authorisation processes contained in Div 3 of Pt VII so that mergers would be subject to the general authorisation process in s 88, with the decision-maker at first instance changing from the Tribunal to the Commission (at [9.14]).

50    Chapter 15 of the Explanatory Memorandum contained a “regulation impact statement”. That part of the Explanatory Memorandum discussed aspects of the Harper Review’s recommendations and the Government’s response to those recommendations. In relation to the review by the Tribunal of merger authorisation determinations, the Explanatory Memorandum stated as follows:

Tribunal review in relation to merger authorisations

15.46    The Harper Review recommended that the review by the Tribunal should be based upon the material that was before the Commission, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied that there is sufficient reason.

15.47    The exposure draft legislation provided for the Tribunal’s review in relation to a merger authorisation to be a limited merits review, that is, reviews would be based only on the material before the Commission at the time of the Commission’s determination. This approach was adopted as it would ensure that parties had the incentive to place all relevant evidence and information before the Commission at first instance, and that Tribunal reviews in relation to merger authorisations could be concluded expeditiously so as not to unduly prejudice merger transactions.

15.48    However, concerns were raised that a limited merits review is inappropriate, particularly as this would mean the Tribunal is unable to take account of a change in circumstances following the Commission’s decision, and parties would be unable to produce evidence or information that they were not able to produce at the time of the Commission’s decision. Several options to address this concern were considered.

15.49    A full merits review (that is, a rehearing) by the Tribunal was considered to be inappropriate in relation to merger authorisations, given the time and commercial sensitivities of such transactions. The prospect of a lengthy merits review could be open to abuse by parties seeking to endanger the success of a merger transaction.

15.50    Ultimately, a ‘hybrid’ merits review, similar to that proposed by the Harper Review, was adopted. The Tribunal’s review in relation to a merger authorisation will be based on the material before the Commission, but the Tribunal may seek clarifying information, and the Tribunal may allow the parties to present new information or evidence which was not in existence at the time of the Commission’s decision. This would appropriately balance procedural fairness by allowing for a change of circumstances to be taken into account, but would prevent parties abusing the authorisation process by choosing to withhold information from the Commission at first instance.

51    The revised statutory framework, as applicable to merger authorisations, is described in this section.

Authorisation

52    The grant of authorisations by the ACCC is governed by Div 1 of Pt VII of the CCA.

53    Under s 88 the ACCC is empowered to grant an authorisation to a person to engage in conduct, specified in the authorisation, to which one or more provisions of Pt IV specified in the authorisation would or might apply. While the authorisation remains in force, those provisions of Pt IV do not apply to the conduct to the extent it is engaged in by the applicant for authorisation, any other person named or referred to in the application as a person who is engaged in or who is proposed to be engaged in the conduct and any other particular persons or classes of persons, as specified in the authorisation, who become engaged in the conduct.

54    Section 90 requires the ACCC to make a determination on the application, either granting such authorisation as it considers appropriate or dismissing the application, and to give written reasons for its determination. Section 90(7) stipulates that (relevantly) the ACCC must not make a determination granting an authorisation under s 88 in relation to conduct unless:

Review of an authorisation determination

55    Part IX of the CCA governs the review of authorisation determinations by the Tribunal. The Part is divided into two Divisions: Div 1, comprising ss 101 to 102, is headed “Applications for review”; Div 2, comprising ss 103 to 110, is headed “Procedure and Evidence”. In making the joint application, the applicants rely on various powers conferred on the Tribunal under both Divisions, as well as powers conferred under reg 22 of the Competition and Consumer Regulations 2010 (Cth) (Regulations) (which regulation was made pursuant to the regulation making power in s 104 of the CCA). In determining the joint application, it is necessary to consider the powers conferred on the Tribunal under Pt IX and their interrelationship.

Part IX, Division 1

56    A person dissatisfied with a determination by the ACCC under Div 1 of Pt VII may apply to the Tribunal for a review of the determination: s 101(1). Section 101(2) states that a review by the Tribunal is a re‑hearing of the matter, unless it is a review of a determination by the ACCC in relation to an application for a merger authorisation. As noted earlier, the present matter is a review of a determination by the ACCC in relation to an application for a merger authorisation. Thus, s 101(2) stipulates that the review in the present matter is not a re-hearing. In conducting the review, s 90(7) applies in relation to the Tribunal in like manner as it applies in relation to the ACCC: s 101(3). In other words, on a review, the Tribunal must apply the same statutory test for authorisation as the ACCC.

57    On a review of a determination of the ACCC in relation to an application for an authorisation, the Tribunal may make a determination affirming, setting aside or varying the determination and, for the purposes of the review, may perform all the functions and exercise all the powers of the ACCC: s 102(1). A determination by the Tribunal affirming, setting aside or varying a determination of the ACCC is taken to be a determination of the ACCC: s 102(2). Section 102 also contains a number of provisions concerning the information, documents and evidence that may be taken into account by the Tribunal on the review. Those provisions are as follows:

(6)     For the purposes of a review by the Tribunal under this Division, the member of the Tribunal presiding at the review may require the Commission to furnish such information, make such reports and provide such other assistance to the Tribunal as the member specifies.

(7)     For the purposes of a review under this Division, the Tribunal may have regard to any information furnished, documents produced or evidence given to the Commission in connexion with the making of the determination, or the giving of the notice, to which the review relates.

(8)     Subsections (9) and (10) apply to a review of a determination of the Commission in relation to:

(a)     an application for a merger authorisation; or

…

(9)     For the purposes of the review, the Tribunal may allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time the Commission made the determination.

(10) Despite subsection (1), the Tribunal must not, for the purposes of the review, have regard to any information, documents or evidence other than:

(a)     information that was referred to in the Commission’s reasons for making the determination; and

(b)     any information or report given to the Tribunal under subsection (6); and

(c)     the information, documents or evidence referred to in subsection (7); and

(d)     information given to the Tribunal as a result of the Tribunal seeking such relevant information, and consulting with such persons, as it considers reasonable and appropriate for the sole purpose of clarifying the information, documents or evidence referred to in subsection (7); and

(e)     any information, documents or evidence referred to in subsection (9).

58    It can be seen that subs (6) and (7) of s 102 are of general application to reviews conducted by the Tribunal of a determination of the ACCC in relation to an application for an authorisation, including merger authorisations. In contrast, subss (9) and (10) apply only to merger authorisations. Subsection (9) is permissive and empowers the Tribunal to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time the ACCC made the determination. Subsection (10) is restrictive and stipulates that, for the purposes of the review, the Tribunal must not have regard to any information, documents or evidence other than as enumerated in the subsection.

59    Subsections (8), (9) and (10) were introduced by the 2017 Amendment Act. The Explanatory Memorandum stated, in respect of those amendments (at [9.79] to [9.81]):

9.79     Subsection 102(9) grants the Tribunal a power to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time of the Commission’s determination. This allows the Tribunal to take account of a change in circumstances that has occurred since the Commission’s determination. For example, if there is a new entry to the relevant market after the Commission’s determination is made, the Tribunal may allow a person to provide new information about the entrant so this change in circumstances can be taken into account in the Tribunal’s review.

9.80     The limitations on the information that may be considered by the Tribunal appropriately balance the interests of all parties to a review of a merger authorisation matter. In particular, they are intended to ensure that applicants for merger authorisation provide the Commission with all relevant material at the time of the application, and do not delay production of that material until later in the process or until Tribunal review. The limitations also facilitate the Tribunal conducting its review expeditiously, given the time sensitive nature of merger transactions.

9.81     Subsection 102(9) ensures that the parties to an application for review are not unfairly prejudiced by the limitations of the Tribunal review where there is genuinely new relevant information, documents or evidence that was not in existence at the time of the Commission’s determination.

Part IX, Division 2

60    As noted above, Div 2 of Pt IX is headed “Procedure and Evidence”. Section 103(1) provides that, in proceedings before the Tribunal:

61    Section 104 specifies that regulations may make provision, amongst other things:

62    Regulation 22 of the Regulations empowers the Tribunal, in any proceeding, to give directions about those matters.

63    Under s 105, the Tribunal is empowered to take evidence on oath or affirmation and to summon a person to appear before the Tribunal to give evidence and to produce such documents (if any) as are referred to in the summons.

Review of a determination relating to a merger authorisation

64    Since the Act was first enacted in 1974 (called, at that time, the Trade Practices Act), s 101(2) has stipulated that a review by the Tribunal of an ACCC authorisation determination is a “re-hearing”. The word “re-hearing” has been consistently construed by the Tribunal as requiring a hearing de novo, meaning that the Tribunal conducts a fresh hearing and determination of the authorisation: Re Queensland Co-operative Miling Association Ltd (1976) 8 ALR 481 (QCMA) at 486 (Woodward J, Mr J Shipton and Prof M Brunt); Re Herald & Weekly Times Ltd on behalf of the members of the Media Council of Australia (1978) 17 ALR 281 (Re Herald & Weekly Times) at 295-6 (Deane J, Mr J Shipton and Mr J Walker). The Tribunal must “make its own findings of fact and reach its own decision as to whether authorisation should be granted or not and, if so, any conditions to which it is to be subject”: Application by Medicines Australia Inc [2007] ACompT 4; ATPR 42-164 (Medicines Australia) at [135] (French J, Mr G Latta and Prof C Walsh). That function is not performed by considering “whether the ACCC was right or wrong in the conclusion it reached or whether it could have better formulated its determination”; rather, the Tribunal must “assess the applications for authorisation on their merits and by reference to the information and evidence given to the ACCC and any material that the parties wish to put before the Tribunal”: Medicines Australia at [138].

65    The 2017 Amendment Act amended s 101(2) such that it now stipulates that a review by the Tribunal is a re‑hearing of the matter, unless it is a review of a determination by the ACCC in relation to an application for a merger authorisation. It is necessary to consider the nature of a review under Pt IX of a merger authorisation determination that is not a re-hearing.

66    The nature of review or appeal rights depends upon the terms of the statute conferring the rights (see Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (NSW) (2011) 245 CLR 446 at [5] per French CJ, Gummow, Crennan, Kiefel and Bell JJ; Shi v Migration Agents Registration Authority (2008) 235 CLR 286 (Shi) at [25] per Kirby J, at [92] per Hayne and Heydon JJ and at [132] per Kiefel J; East Australian Pipeline Pty Ltd v Australian Competition and Consumer Commission (2007) 233 CLR 229 at [62] per Gummow and Hayne JJ). In Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245, Mason CJ, Brennan and Toohey JJ observed (at 261, citation omitted):

In considering the nature of the 'review' contemplated by s25ZAC, it is relevant to note that the expression 'review' is commonly used in the context of judicial control of administrative action and in the context of comprehensive administrative review by an administrative tribunal of administrative decisions. But what emerges from the judicial decisions and, for that matter, from statutes is that 'review' has no settled pre-determined meaning; it takes its meaning from the context in which it appears.

67    In Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379 (Pilbara Infrastructure), the High Court considered the nature of a review by the Tribunal of a declaration decision of the designated Minister under s 44K of the Act (prior to its amendment by the Trade Practices Amendment (Infrastructure Access) Act 2010 (Cth)). The plurality (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) contrasted a “re-hearing” by the Tribunal under Pt IX, which requires deciding an issue afresh on whatever material is placed before the new decision-maker, and a “reconsideration” by the Tribunal under s 44K(4), which requires reviewing what the original decision-maker decided and doing that by reference to the material placed before the original decision-maker (at [60], [65]). The amendments to s 44K (and related provisions) made by the Trade Practices Amendment (Infrastructure Access) Act 2010 (Cth) reinforced the conclusion that the review required by s 44K is a review by which the Tribunal must make its own decision with respect to the matter under review, but based on the material taken into account by the original decision-maker (the Treasurer) supplemented by any additional material obtained by the Tribunal in exercise of express statutory powers (under ss 44K(6), 44K(6A) and 44ZZOAAA(4)): see Application by New South Wales Minerals Council (No 3) [2021] ACompT 4 at [13]-[31].

68    Analogous reasoning is applicable in the context of a review of merger authorisation determinations. As noted earlier, the 2017 Amendment Act differentiated the review of merger authorisation determinations from other authorisation determinations in two material ways. First, a review of a merger authorisation is required to be completed by the Tribunal within a statutory time period. Second, a review of a merger authorisation is not a re-hearing of the matter and restrictions are imposed on the information, documents and evidence to which the Tribunal may have regard. In other important respects, however, the statutory framework governing the review of authorisation determinations does not distinguish between merger authorisations and other authorisations. Most relevantly, ss 102(1) and (2) stipulate in respect of all reviews of authorisation determinations by the Tribunal that:

69    The language of those subsections is similar to that found in many statutes that provide for review by an administrative tribunal of administrative decisions including, for example, ss 43(1) and (6) of the Administrative Appeals Tribunal Act 1975 (Cth). The combined effect of ss 102(1) and (2) indicate that the Tribunal’s review task is to determine whether the decision made by the ACCC was objectively the correct or preferable decision to be made: cf Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 78 (Smithers J). In that sense, the Tribunal “stands in the shoes” of the ACCC: O’Sullivan v Australian Securities and Investments Commission (2018) 160 ALD 233 at [36], citing Shi at [40], [100] and [134]. The substance of those provisions have remained unchanged since the Act was first enacted and the provisions have been consistently interpreted in that manner: see for example QCMA at 486; Re Herald & Weekly Times at 295-6; Australian Consumers’ Association’s Application (Re Media Council of Australia (No 2)) (1987) 82 ALR 115 at 126 (Lockhart J, Prof M Brunt and Dr B Aldrich); Medicines Australia at [135] and [138].

70    The distinction between the two forms of review of authorisation determination can therefore be expressed as follows. In respect of authorisation determinations other than merger authorisations, the Tribunal must conduct a rehearing, making its own decision with respect to the application of the statutory criteria in s 90(7) based on whatever material is placed before it in the re-hearing. In respect of merger authorisation determinations, the Tribunal must conduct a review of the ACCC’s determination, making its own decision with respect to the application of the statutory criteria in s 90(7) having regard to only that material that is enumerated in s 102(10).

The proper construction of ss 102(9) and (10)

71    On the joint application, the parties were in dispute as to the meaning and effect of paragraphs (d) and (e) of s 102(10), and the interrelationship of s 102(10) with the powers conferred on the Tribunal in Div 2 of Pt IX.

72    Section 102(10) stipulates that the Tribunal must not, for the purposes of the review, have regard to any information, documents or evidence other than:

73    Paragraph (a) is clear on its terms and refers to information that was referred to in the ACCC’s reasons for making the determination.

74    Paragraph (b) refers to any information or report given to the Tribunal under subs (6). That subsection states that the member of the Tribunal presiding at the review may require the ACCC to furnish such information, make such reports and provide such other assistance to the Tribunal as the member specifies. This is a power exercisable by the presiding member at a review and enables the Tribunal to seek assistance from the ACCC whether by furnishing information, making reports or in some other manner.

75    Paragraph (c) refers to the information, documents or evidence referred to in subs (7). That subsection states that the Tribunal may have regard to any information furnished, documents produced or evidence given to the ACCC in connexion with (relevantly) the making of the determination to which the review relates. Thus, paragraph (c) expands upon paragraph (a) (which refers to information that was referred to in the ACCC’s reasons for making the determination) to incorporate the body of information, documents and evidence that was before the ACCC in making its determination.

76    Paragraph (d) empowers the Tribunal to seek information, and to consult with persons, as it considers reasonable and appropriate for the sole purpose of clarifying the information, documents or evidence referred to in subs (7); viz, the information furnished, documents produced or evidence given to the ACCC in connexion with (relevantly) the making of the determination to which the review relates.

77    The applicants submitted that paragraph (d) should not be construed as being confined to a purpose of illuminating ambiguous material. They argued that the ordinary meaning of the word “clarify” is to make clear, pure, or intelligible (as per the Macquarie Concise Dictionary, Sixth Edition). The applicants submitted that the process of rendering information, documents and evidence intelligible includes obtaining material that would place a document or evidence in its full and proper context and, once having done so, testing the reliability or credibility of that evidence. They argued that “clarifying” information, documents or evidence includes assisting the Tribunal to develop a clearer understanding of that material, including by revealing the circumstances or context in which it was created or given.

78    For the purposes of the present application, it is unnecessary to attempt an exhaustive definition of paragraph (d). It is important, though, to note the entirety of the language used in the paragraph. The paragraph empowers the Tribunal to have regard to “information given to the Tribunal as a result of the Tribunal seeking such relevant information” and “consulting with such persons, as it considers reasonable and appropriate”, for the sole purpose of clarifying the information, documents or evidence referred to in subs (7). Thus, with the sole purpose of clarifying material given to the ACCC in the course of making its determination, the Tribunal is empowered to “seek … relevant information” and “consult with persons as it considers reasonable and appropriate”. The powers given to the Tribunal, to seek relevant information and to consult with persons, are consistent with the ordinary meaning of the word “clarify”, which is to make clear or intelligible.

79    Stated at a level of generality, the Tribunal accepts that, in certain circumstances, “clarifying” information, documents or evidence may include assisting the Tribunal to develop a clearer understanding of that material, including by reference to contextual material. For example, data and statistics may not be able to be understood or properly interpreted without information concerning the source of the underlying data or the methodology applied in generating the data and statistics. The Tribunal does not, however, accept the applicants’ broader submission that “clarifying” information, documents or evidence ordinarily extends to testing the reliability or credibility of that material. To clarify means “to make clear”. The Tribunal must consider that something in the information, documents or evidence before the ACCC is or may be unclear before it is permitted to seek information or consult with persons for the sole purpose of clarifying it. Testing the reliability or credibility of information, documents or evidence is not a process of clarification; it is a process of evaluation of the cogency and weight of the material.

80    Paragraph (e) refers to any information, documents or evidence referred to in subs (9). Under subs (9), the Tribunal is empowered to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time the ACCC made the determination.

81    The applicants submitted that the phrase “in existence” in subs (9) can take one of three meanings: bare existence (ie, material not created at all); the existence of materials before the ACCC (ie, whether the materials were furnished to the ACCC); or the existence of materials known to a party to the review of the determination. The applicants argued that each construction is available on the text, but the second and third constructions are consistent with the legislative policy of striking a balance between affording parties procedural fairness and preventing parties from withholding information from the ACCC during its consideration of the application. In that regard, Telstra placed reliance on the Explanatory Memorandum at [9.79]-[9.81] and [15.50].

82    The Tribunal rejects those submissions. They do not accord with the ordinary meaning of the language of subs (9) and are not supported by the statutory context and purpose, including particularly the statutory purpose as disclosed in the extrinsic materials. Again, it is important to begin with the statutory language as a whole. The subsection empowers the Tribunal to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time the Commission made the determination. The ordinary meaning of the word “allow” is to permit; the subsection does not, on its terms, contemplate the Tribunal using powers of compulsion such as the power in s 105(2) to summon a person to appear and give evidence or produce documents. In context, the word “new” contrasts the information, documents and evidence referred to in subs (7) (being the material before the ACCC in connection with the making of the determination under review). Thus, subs (9) contemplates the Tribunal permitting a person to provide to the Tribunal information, documents or evidence that was not before the ACCC. It can be accepted that there is a degree of ambiguity in the descriptor “in existence at the time the Commission made the determination” when used to qualify the phrase “information, documents or evidence”. Taken literally, the descriptor could refer to an affidavit or expert report that is only brought into existence after the ACCC made its determination, but which contains information or evidence about facts and matters that existed before the ACCC made its determination. Read in context and in light of the statutory purpose as revealed by the extrinsic materials, however, it is clear that the descriptor is intended to confine the Tribunal’s discretion so as to permit the provision of new material concerning facts and matters that did not exist at the time the ACCC made its determination.

83    That statutory purpose is evident from s 101(2) and ss 102(8), (9) and (10), which stipulate that a review of a merger authorisation is not a re-hearing, and the Tribunal is required to conduct its review on the basis of the material before the ACCC subject to the circumscribed exceptions. The statutory purpose is also confirmed by the extrinsic materials. As set out above, the Explanatory Memorandum explains that: the limitations on the information that may be considered by the Tribunal by s 102(10) “appropriately balance the interests of all parties to a review of a merger authorisation matter”; the limitations “are intended to ensure that applicants for merger authorisation provide the Commission with all relevant material at the time of the application, and do not delay production of that material until later in the process or until Tribunal review”; and the limitations also “facilitate the Tribunal conducting its review expeditiously, given the time sensitive nature of merger transactions” (at [9.80]). The Explanatory Memorandum also confirms that the purposes of s 102(9) is “to take account of a change in circumstances that has occurred since the Commission’s determination” (at [9.79]) and that the subsection “ensures that the parties to an application for review are not unfairly prejudiced by the limitations of the Tribunal review where there is genuinely new relevant information, documents or evidence that was not in existence at the time of the Commission’s determination” (at [9.81]).

Procedural fairness

84    The Tribunal notes that, in aid of their contentions concerning the construction of paragraphs (d) and (e) of s 102(10), the applicants placed reliance on procedural fairness considerations. The applicants submitted that they had not been afforded an opportunity to test and challenge evidence provided to the ACCC by Optus in confidence during the ACCC determination process. Implicitly, the applicants’ contention was that part of the purpose of paragraphs (d) and (e) of s 102(10) is to allow the Tribunal to afford parties the opportunity to test and challenge such evidence that was provided to the ACCC.

85    The Tribunal does not accept those contentions. It is not in dispute that, in determining an authorisation application, the ACCC must afford the applicant procedural fairness. However, the content of the requirements of procedural fairness varies according to the statutory context.

86    With respect to confidential material, s 89 of the CCA expressly contemplates that, in the course of an authorisation application, a person may provide documents or submissions to the ACCC and request that the document or submission be treated as confidential, and the ACCC is empowered to determine such a request. That power is important in the context of applications for authorisation which confer immunity from the competition law prohibitions in Pt IV of the CCA and where the ACCC is frequently required to solicit confidential information from market rivals. Section 89(7) stipulates that the ACCC may disclose such confidential information to such persons and on such terms as it considers reasonable and appropriate for the purposes of making its determination on the authorisation application. Thus, the ACCC is empowered to receive information on a confidential basis and determine the manner in which, and the extent to which, such information is disclosed in order to satisfy the requirements of procedural fairness. It is not the case that a failure to reveal confidential information to an applicant for authorisation will necessarily constitute a breach of the requirements of procedural fairness by the ACCC. Nor is a review by the Tribunal a process to correct perceived failures of procedural fairness by the ACCC.

87    With respect to the examination of persons who provide witness statements or affidavits to the ACCC, administrative decision making does not always require the decision-maker to afford a person affected by the decision with a right to cross-examine persons who give evidence to the decision-maker: see for example O’Rourke v Miller (1985) 156 CLR 342 at 353 (Gibbs CJ, with whom Mason J and Dawson J agreed at 354 and 363 respectively) and at 360-361 (Wilson J). There is nothing in the statutory framework that suggests that the ACCC must afford an applicant for authorisation an opportunity to cross-examine persons from whom the ACCC receives written or oral evidence. The ACCC is not required to conduct a hearing at which evidence is received and the evidence is tested by cross-examination. Rather, s 90 contemplates that the ACCC will proceed by inviting submissions from interested persons and seeking information from the applicant and other persons. In the case of a merger authorisation, the ACCC is not required to comply with the requirements of s 90A (which, in the case of other authorisation applications, requires the ACCC to produce a draft determination and conduct a conference if requested by the applicant or an interested person). The ACCC is empowered by s 155(1) and (2)(b)(iii) to require a person to produce information or documents or to appear before the ACCC to give evidence.

88    The implicit contention of the applicants that a review of the ACCC’s determination by the Tribunal is intended to afford an applicant an opportunity to test and challenge evidence that was received by the ACCC is not supported by the language of ss 102(9) and (10) nor the extrinsic materials. As discussed above, paragraph (d) of s 102(10) is directed to clarifying material that was before the ACCC, and paragraph (e) (which refers to s 102(9)) is directed to information, documents and evidence that was not in existence at the time of the ACCC’s determination. The Explanatory Memorandum explained that those provisions “would appropriately balance procedural fairness by allowing for a change of circumstances to be taken into account, but would prevent parties abusing the authorisation process by choosing to withhold information from the Commission at first instance” (at [15.50]). This confirms that the procedural fairness concern that is sought to be addressed by those provisions is the possibility of a change in circumstances after the ACCC’s determination was made.

E.    determination of the joint application

Paragraph 1 of the joint application

89    By paragraph 1 of the joint application, the applicants sought a direction from the Tribunal pursuant to reg 22(1)(a) of the Regulations compelling Optus to file and serve on the ACCC and the applicants the following documents:

90    The applicants sought the direction on two bases. First, they submitted that s 102(10)(d) is engaged because it would be reasonable and appropriate for the Tribunal to seek this information for the sole purpose of clarifying the Optus business case that was before the ACCC under s 102(7). Second, they submitted that the information sought would be new documents or evidence under s 102(9), because they were not relevantly “in existence” (in the sense of being before the ACCC) at the time the ACCC made its determination.

91    The evidence and submissions filed by the applicants in support of paragraph 1 of the joint application made clear that the applicants consider that the ACCC did not adequately or sufficiently interrogate the evidence given by Optus to the ACCC, including particularly Optus’s business case modelling that modelled the impact of the Proposed Transaction on Optus’s 5G investment business case. The applicants seek the above information to test and challenge the veracity or reasonableness of Optus’s business case modelling. Telstra submitted that the information would be centrally relevant to determining whether Optus’s assessment and modelling was contrived, unreliable or otherwise commercially irrational.

92    In the Tribunal’s view, the information sought by the applicants does not satisfy the criteria in either ss 102(10)(d) or 102(9). In relation to s 102(10)(d), the applicants did not identify any aspect of Optus’s business case modelling that was unclear and required clarification. For the reasons given earlier, s 102(10)(d) does not permit the Tribunal to seek additional information for the purpose of testing or challenging information that was before the ACCC. The Tribunal’s function is not to conduct a re-hearing and its information gathering powers are strictly constrained by the provisions of s 102(10). In relation s 102(9), the information being sought by the applicants was in existence at the time that the ACCC made its determination and is therefore outside the purview of that provision.

93    For those reasons, the Tribunal rejects the request under paragraph 1.

Paragraph 2 of the joint application

94    By paragraph 2 of the joint application, the applicants requested the Tribunal to issue a summons under s 105(2) to each of Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam to attend the hearing to answer questions to be put by the applicants (in other words, to be cross-examined).

95    Again, the evidence and submissions filed by the applicants in support of paragraph 2 of the joint application make clear that the applicants consider that the ACCC did not adequately or sufficiently interrogate the evidence given by those Optus executives to the ACCC. In his affidavit, Mr Muys confirmed that the purpose of paragraph 2 is to enable the applicants to question Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam in relation to the following topics:

96    Telstra submitted that there was no opportunity for the applicants to test or respond to the evidence of Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam while the matter was before the ACCC, because the applicants were not privy to the evidence given under compulsory examination.

97    For similar reasons as expressed in respect of paragraph 1, the applicants have not satisfied the Tribunal that the request satisfies the criteria in either ss 102(10)(d) or 102(9).

98    In relation to s 102(10)(d), the applicants did not identify any aspect of the evidence given by Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam that was unclear and required clarification. The Tribunal is not permitted to seek additional information for the purpose of testing or challenging information that was before the ACCC.

99    In relation s 102(9), the Tribunal does not consider that cross-examining Ms Bayer Rosmarin, Mr White and Mr Kanagaratnam with respect to evidence they have previously given to the ACCC, for the purpose of testing and challenging that evidence, would satisfy the statutory criteria. Such questioning would not adduce information or evidence that was not in existence at the time the ACCC made the determination in the sense contemplated by the provision. The answers would not concern events and circumstances that came into existence after the date of the ACCC’s determination but would concern events and circumstances that existed prior to that date.

100    Optus and the ACCC advanced a further contention that the application under paragraph 2 should also be refused because neither ss 102(10)(d) nor 102(9) empowers the Tribunal to issue a summons under s 105(2). Optus and the ACCC argued that neither the reference to “consulting” with persons in s 102(10)(d), nor the reference to “allowing a person to provide new information, documents or evidence”, includes compelling a person to attend a hearing to give evidence. It is unnecessary to express a concluded view on that contention for the purposes of the present application. It may be accepted that the language of “allowing a person to provide new information, documents or evidence”, does not easily accommodate the notion of the Tribunal issuing a summons to a person to attend and give evidence. In contrast, however, the power given to the Tribunal by s 102(10)(d) to “seek such relevant information” is broadly stated and may enliven the procedural powers given to the Tribunal to obtain evidence in Div 2 of Pt IX.

101    For those reasons, the Tribunal rejects the request under paragraph 2.

Paragraph 3 of the joint application

102    By paragraph 3 of the joint application, the applicants seek a direction pursuant to reg 22(1) of the Regulations and s 102(10)(d) of the CCA, or alternatively s 102(9) of the CCA, allowing TPG to file and serve an independent expert report of Dr Jorge Padilla which identifies and explains the extent to which the outcome of Dr Padilla’s previous modelling of the likely effect of the Proposed Transaction on Optus’s 5G investment incentives is affected by adopting:

103    As noted earlier, the applicants did not provide the Tribunal with a copy of Dr Padilla’s proposed further report for the purposes of considering the present application. This had the result that the Tribunal was required to consider the application on a somewhat theoretical basis.

104    Having regard to the submissions advanced by the applicants, and in the absence of the proposed further report from Dr Padilla, the Tribunal is not persuaded that the report would satisfy the criteria in s 102(10)(d), being information that would clarify the modelling evidence that was otherwise before the ACCC. The evidence and submissions advanced on the application did not identify any aspect of the modelling evidence that was unclear or ambiguous. Rather, the further report would express the findings and opinions of Dr Padilla with respect to the net present value of Optus investing in a 5G regional network on a different set of assumptions.

105    There is room for debate whether s 102(9) permits the Tribunal to receive an expert report based on a set of assumptions that were not considered or analysed by the ACCC in reaching its determination. It is difficult to characterise assumptions used in relation to a business model that forecasts future earnings as being “in existence” at any particular point in time. The assumptions are predictions about future events. An expert report based on a set of assumptions that were not considered or analysed by the ACCC in reaching its determination may be characterised as information or evidence that was not in existence at the time the ACCC made the determination.

106    In the present case, it is unnecessary to resolve the question whether s 102(9) permits the Tribunal to receive Dr Padilla’s proposed further report. Even if the Tribunal is permitted to receive the report, the Tribunal does not consider it appropriate in the circumstances of this case. The evidence filed on this application shows that Optus provided to the ACCC modelling with respect to the effects of the Proposed Transaction on Optus’s 5G business case. The applicants provided alternative modelling undertaken by Dr Padilla. The ACCC then undertook its own modelling, varying certain of the assumptions used by Optus and by Dr Padilla. The Tribunal considers that the parties are able to advance submissions in this review on the basis of the competing models that were before the ACCC when making its determination. The Tribunal notes, in that regard, that the ACCC’s own modelling was referred to in the ACCC’s reasons for its determination (at [9.132] and [9.133]), and is therefore information to which the Tribunal may have regard under s 102(10)(a). To ensure that the ACCC’s modelling is available to the parties, and for the avoidance of any doubt, the Tribunal will give a direction under s 102(6) requiring the ACCC to furnish to the Tribunal a copy of the ACCC’s model referred to at [9.132] and [9.133] of its reasons for determination. On the basis of those various models, it will be open to the parties at the hearing to advance submissions with respect to the modelling outcomes if different assumptions are used, and to advance submissions about the evidence that was before the ACCC that provides support for the adoption of particular assumptions. The Tribunal is not precluded by s 102(10) from receiving submissions of that nature (or indeed from undertaking its own calculations on the basis of different combinations of assumptions).

107    For those reasons, the Tribunal rejects the request under paragraph 3 and will give a direction under s 102(6) requiring the ACCC to furnish to the Tribunal a copy of the ACCC’s model referred to at [9.132] and [9.133] of its reasons for determination.

Associate:

Dated:    13 April 2023