Firms act on major telco price ruling

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Several firms acted on the Federal Court of Australia battle that pit Telstra against an Australian Competition and Consumer Commission (ACCC) and respondents including Optus Network, TPG Telecom, Macquarie Telecom, Telcoinabox, Symbio Wholesale.

The Federal Court of Australia sided with the ACCC’s final access determination (FAD) ruling that Telstra needs to lower by 9.4% the access price paid by rival companies to access its copper network. Telstra argued against the cut, saying that it prevents the telco from recovering infrastructure investments on its copper network, which is being overstretched by the national broadband network.

Telstra was advised by Gilbert + Tobin. The ACCC was advised by DLA Piper. Optus and TPG, which joined the ACCC’s case in late 2015, were advised by Maddocks and Thomson Geer, respectively. The Competitive Carriers Coalition (CCC), a group of Australia's non-dominant telcos which joined the case, was advised by Baker McKenzie. The group includes Macquarie Telecom, Telcoinabox, and Symbio Wholesale.

“Telstra argued that the unit costs for maintaining the network would increase as less people would be using its network as they migrated to the NBN. This meant that Telstra lost the opportunity to exploit certain economies of scale,” said Brendan Coady, Maddocks partner. “The ACCC determined – and the Federal Court confirmed – that Telstra had the opportunity to be compensated for these costs during its commercial negotiations with NBN Co. and that these costs should not be passed on to other telcos and, ultimately, consumers.”

Coady co-led the Maddocks team with partner Norman Lucas.

Justice Lindsay Foster said that Telstra failed to show that the ACCC committed any reviewable error in the course which it took.

“At best, the grounds of review advanced by Telstra rise no higher than impermissible review of the merits of the ACCC's decision and impermissible attacks on methodologies employed by the ACCC which were plainly open to it,” Foster said.

Telstra has been ordered to pay ACCC’s costs in the proceedings. It will also pay costs for other respondents, including Optus and TPG, if they make applications by 4 April.


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