The Australian Competition and Consumer Commission will allow Telstra Pay TV Limited to continue to resell Foxtel and Austar's new digital pay TV services on condition that customers also acquire telecommunications services from Telstra Corporation Limited.
On 11 February and 30 April 2004, Telstra and Telstra Pay TV sought immunity* from prosecution under the third line forcing provisions of the Trade Practices Act 1974.
The ACCC has previously allowed immunity to stand in respect of similar conduct relating to Telstra Pay TV's resale of Foxtel's analogue pay TV service in 2002, and Austar's previous supply of digital services in 2003.
The ACCC's assessment involved determining whether the public benefits associated with the incorporation of pay TV services into Telstra's existing bundles of telecommunications services would outweigh any public detriments resulting from the conduct.
"In reaching its decision, the ACCC assessed the likely effect of adding pay TV services to Telstra's bundles of telecommunications services on the future state of competition in the markets for pay TV and telecommunications services", ACCC Chairman, Mr Graeme Samuel, said today.
"The primary public benefits of Telstra's bundling of pay TV and telecommunications services are the discounts or bonus telecommunications services Telstra will provide some customers.
"The conduct will enable Telstra Pay TV to continue to be a participant in the pay TV market. However, the ACCC recognised that Telstra Pay TV's incentive to aggressively compete with Foxtel will likely be limited by Telstra's equity interest in Foxtel.
"While there may be increased scope for competition between Telstra and telecommunications firms in telecommunications service markets in the short term, the effect of the Telstra's bundling of pay TV and telecommunications services in the long term is less clear.
"The ACCC is particularly concerned that the competitive environment surrounding the supply of pay TV and telecommunications may have diminished since the 2002 notifications.
"However, based on current information, it does not appear likely that competition in the telecommunications service market will be decreased.
"Therefore, on balance, the ACCC decided that not revoking Telstra and Telstra Pay TV’s immunity in relation to these notifications would be in the public interest.
"The ACCC will continue to monitor the effects of Telstra and Telstra Pay TV's bundling conduct on competition in the future".
* Notification provides immunity from legal action by the ACCC or any other party for potential breaches of the exclusive dealing provisions of the Trade Practices Act. Third line forcing is a specific type of exclusive dealing conduct that involves the supply of goods or services on condition that the purchaser acquires a second good or service from another supplier.
Media inquiries
Mr Michael Cosgrave, Group General Manager, Communications Group, (03) 9290 1914or 0416 043 160
Ms Lin Enright, Media, (02) 6243 1108or 0414 613 520
On 11 February 2004, Telstra notified the ACCC of its intention to resell and discount the new digital pay TV services of the Foxtel Partnership and Austar United Communications Limited and Austar Entertainment Pty Limited on condition that customers also acquire Telstra's telephony services (N31277 and N31278 – the February notifications). On 30 April 2004, Telstra lodged further notifications (N32292 and N31293 – the April notifications) relating to Telstra's supply of Foxtel and Austar's new digital pay TV services on condition that customers also acquire Telstra's telephony services. The conduct described in the April notifications involves Telstra offering of bonus telecommunications services instead of percentage discounts on eligible services as in the February notifications. In the February notifications, Foxtel's and Austar's new digital pay TV services will be available though Telstra's Rewards Packages.
Notification of third line forcing conduct
Third line forcing is a specific form of exclusive dealing and prohibited under section 47(6) and (7) of the Act no matter what its effect on competition. However, businesses may seek immunity from court action for third line forcing conduct under the notification and authorisation processes in the Act. Under the notification process, immunity from court action for third line forcing conduct is obtained automatically 14 days after lodgement, and continues unless and until the ACCC issues a notice removing the immunity. The ACCC may issue a notice removing the immunity provided by a notification if it is satisfied that the likely benefit to the public from the proposed conduct would not outweigh the likely detriment to the public resulting from the conduct. The process of assessing whether or not the benefit outweighs the detriment is transparent and public. The ACCC consulted a wide range of interested parties. All non-confidential submissions are available on a public register.
