ACCC issues Consultation Notice to Telstra over wholesale line rental increase

The Australian Competition and Consumer Commission today issued a Consultation Notice* in relation to Telstra's decision to increase the price for line rental that it charges to its wholesale customers.

The potential competition concerns arise from Telstra's recent introduction of changes to the Home Access rate plan to its wholesale customers and HomeLine Part rate plan to its retail customers. The ACCC received a number of complaints from Telstra's wholesale customers stating that the prices offered by Telstra for the line rental component of the majority of its retail fixed line services are below Telstra's prices for the line rental component of its wholesale Home Access service.

The ACCC is concerned that Telstra's conduct raises the costs of its competitors in the retail fixed services market and substantially hinders their ability to compete for the supply of fixed line services to consumers.

"The Consultation Notice informs Telstra that the ACCC proposes to issue a Part A Competition Notice and gives it the opportunity to respond by 27 January 2006", ACCC Chairman, Mr Graeme Samuel, said today.  "The ACCC will carefully consider any submission received from Telstra within the time limit when determining whether or not to issue a Competition Notice.

"The issue of the Consultation Notice does not necessarily mean that the ACCC will ultimately issue a Competition Notice. The ACCC will consider all relevant submissions put to it and a number of other factors before determining whether to issue a Competition Notice".

The factors which the ACCC will consider include those set out in the ACCC's February 2004 Competition Notice Guidelines** and such other matters as the ACCC considers relevant. In this regard, if Telstra's wholesale customers or other interested parties wish to provide material, they should do so before 27 January 2006 to enable the ACCC to assess whether the material should be taken into account.

Background

*Under section 151AKA contained in Part XIB of the Trade Practices Act 1974, the ACCC is required to give a carrier or carriage service provider written notice of its proposal to issue a Part A Competition Notice. This notice must:

• state that the ACCC proposes to issue a Competition Notice in relation to the carrier or provider
• describe, in summary form, the kind of anti-competitive that is proposed to be specified in the Part A Competition Notice
• invite the carrier or provider to make a submission to the ACCC on the proposal by a specified time limit

The ACCC must consider any submission received within that time limit before it issues a Part A Competition Notice.

**Under section 151AP of the Trade Practices Act 1974, the ACCC is required to formulate guidelines and have regard to these in deciding to issue a Competition Notice.