An access undertaking is a document that sets out matters relevant to obtaining access to a particular service. These matters may include the terms and conditions on which the service provider will offer access, the price for the service, and dispute resolution processes in the event the parties cannot agree.
Under Part IIIA of the Competition and Consumer Act 2010, the ACCC has a role in assessing and deciding whether to accept access undertakings put forward by service providers. The ACCC can accept or reject the undertaking. If the ACCC accepts the undertaking, the provider is required to abide by its terms, and the undertaking can be enforced in the Federal Court.
The access provider can seek to vary an undertaking that is in force or it can withdraw the undertaking, but only with the ACCC’s consent.
Where the ACCC accepts an access undertaking, the service cannot then be declared under Part IIIA. A service provider can, however, submit an access undertaking after a service has been declared.
The Competition and Consumer Act 2010 does not prescribe the information that should be included in an access undertaking, and what is appropriate to include will depend on the circumstances in each case. Parties considering submitting an access undertaking should first contact the ACCC to discuss their application.
Part IIIA of the Act does however note several examples of the kinds of things that might be dealt with in an undertaking. These are:
terms and conditions of access to the service;
procedures for determining terms and conditions of access to the service;
an obligation on the provider not to hinder access to the service;
an obligation on the provider to implement a particular business structure;
an obligation on the provider to provide information to the ACCC or to another person;
an obligation on the provider to comply with decisions of the ACCC or another person in relation to matters specified in the undertaking;
an obligation on the provider to seek a variation of the undertaking in specified circumstances.
What is the basis for the ACCC's decision to accept or reject an undertaking?
Section 44ZZA(3) of the Act states that the ACCC may accept an access undertaking if it thinks it appropriate to do so, having regard to the following matters:
the objects of Part IIIA (see below);
pricing principles (see below);
the legitimate business interests of the provider;
the public interest, including the public interest in having competition in markets (whether or not in Australia);
the interests of persons who might want access to the service;
whether the undertaking is in accordance with an access code that applies to the service; and
any other matters that the ACCC thinks are relevant.
The objects of Part IIIA, specified in section 44AA, are to:
promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets; and
provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry.
The pricing principles are specified in section 44ZZCA, and provide that:
regulated access prices should:
be set so as to generate expected revenue for a regulated service that is at least sufficient to meet the efficient costs of providing access to the regulated service; and
include a return on investment commensurate with the regulatory and commercial risks involved; and
access price structures should:
allow multi-part pricing and price discrimination when it aids efficiency; and
not allow a vertically integrated access provider to set terms and conditions that discriminate in favour of its downstream operations, except to the extent that the cost of providing access to other operators is higher; and
access pricing regimes should provide incentives to reduce costs or otherwise improve productivity.
What is the process for having Part IIIA access undertaking considered by the ACCC?
ACCC assessment of an access undertaking will involve different stages, and the steps in a simple assessment are set out below. These steps are an indicative guide of the process the ACCC may adopt when assessing an access undertaking. The actual process for having an undertaking considered by the ACCC will depend on the circumstances in each case, and will be informed by a number of matters, including but not limited to, the characteristics and complexity of the undertaking that is put forward. For some parts of the process legal requirements in the Act dictate steps the ACCC must follow.
Pre-lodgement The ACCC strongly encourages parties contemplating submitting an access undertaking to first contact the ACCC to discuss their application. ACCC staff will be able to provide guidance on the ACCC’s assessment process, and on matters that may be of significance during assessment of the undertaking.
Pre-lodgement discussions with ACCC staff are intended to facilitate the undertaking assessment process to the benefit of all parties, and they are not a replacement for a formal assessment process. The ACCC’s ultimate decision on whether to accept or reject an access undertaking will occur following a thorough assessment, typically including public consultation.
Formal lodgement The ‘formal lodgement’ of an access undertaking application will commence a 180 day statutory time period for the ACCC to make a decision. The ACCC expects that a formal access undertaking application will include sufficient information to enable the ACCC to begin its assessment (see further below).
Assessment The ACCC will commence assessment of the undertaking application, having regard to the matters specified in the Act. The ACCC will usually conduct public consultation on the application, which may involve publishing the application on the ACCC’s website, calling for submissions from interested parties, and holding meetings with relevant stakeholders. The ACCC may also request further information from the access provider or other parties.
Draft Decision The ACCC will usually publish a Draft Decision, setting out its preliminary view on whether or not it thinks it is appropriate to accept the proposed undertaking, having regard to the matters specified in the Act, and explaining its reasons for reaching this view. The ACCC may alternatively set out its preliminary view in a Position Paper.
The ACCC’s preliminary view is just that; a preliminary view, taking into account all relevant information available up to that point. The ACCC will typically conduct further public consultation on its preliminary view, seeking further submissions from interested parties. The ACCC may consequently revise its preliminary view in light of new or additional information.
If the ACCC expresses the preliminary view that an undertaking is not appropriate to accept, the ACCC may also provide guidance to the access provider on possible changes to the undertaking that, if incorporated, might make the undertaking more likely to be acceptable.
Further assessment Following publication of the ACCC’s preliminary view, and consideration of any submissions from interested parties, the ACCC will form its decision.
Decision Having conducted its assessment, the ACCC will make a decision on whether it is appropriate to accept the undertaking, having regard to the matters specified in the Act. The ACCC will publish its decision and its reasons for reaching that decision.
An ACCC decision about an access undertaking may be reviewed by the Australian Competition Tribunal. If the undertaking is accepted and the ACCC’s decision is not subject to review, the provider is required to abide by the terms of the undertaking, and the undertaking can be enforced in the Federal Court.
How long will it take for the ACCC to assess an access undertaking?
Part IIIA sets time limits for ACCC decisions on access undertakings.
The ACCC must make a decision on an access undertaking application within 180 days, beginning on the day that it receives the application.
The 180 day period may in effect be extended by ‘clock stoppers.’ That is, the Act provides that certain periods of time are not counted when calculating the 180 period. This occurs where:
the ACCC and the access provider agree to stop the clock;
the ACCC gives a notice requesting further information in relation to the application;
the ACCC publishes a notice inviting public submissions in relation to an application; or
the ACCC publishes a decision to defer consideration of whether to accept the undertaking while the ACCC arbitrates an access dispute.
If the ACCC does not publish a decision on the undertaking within the 180 day period (or longer period having regard to clock-stoppers), then the Act states that the application is deemed to have been rejected.
In practice, the actual time required to assess an undertaking application will depend on the circumstances in each case.
What information should be provided to the ACCC to support an access undertaking application?
The evaluation of an undertaking by the ACCC is a significant task. Services subject to an accepted undertaking cannot be declared, and the ACCC will critically examine an undertaking application to determine whether it is appropriate to accept. The ACCC strongly encourages parties contemplating submitting an access undertaking to first contact the ACCC to discuss their application.
Generally though, sufficient information should be provided to allow interested parties to comment on the application and for the ACCC to evaluate the proposed undertaking. As a guide, the following information should be provided by an access provider in support of a proposal for an access undertaking:
name of applicant;
address for the service of documents;
contact name and address for further information;
description of the applicant’s existing and/or anticipated business/function;
description of the facility involved, including the identity and corporate structure of the owner(s) and/or relevant service providers;
description of the services to be covered by the proposed undertaking;
whether any of the services are declared services pursuant to s. 44H of the Act;
whether the services are subject to an existing access regime;
whether there are any existing contracts for access to the facility and, if so, information on the contracts;
description of the industry in which the service is provided;
description of the market in which the service operates;
description of any related or associated markets that would be affected by the provision of access to the service;
description of the parties likely to be affected by the provision of access;
identification of any parties that have sought access or are likely to seek access to the service;
period for which the undertaking is to apply;
details of the terms and conditions proposed by the application; and
details of any claims for confidentiality and the reasons why confidentiality is being sought.
Further information and contact details
If you have a query about the ACCC’s role in relation to access undertakings, or are contemplating making an access undertaking application, please contact:
General Manager Fuel, Transport and Prices Oversight Branch Regulatory Affairs Division Australian Competition and Consumer Commission GPO Box 520 Melbourne VIC 3000 Email: transport@accc.gov.au
