Seven Network Limited [2004] ACompT 10

AUSTRALIAN COMPETITION TRIBUNAL

Seven Network Limited [2004] ACompT 10 File No 10 of 2003 RE: APPLICATION FOR REVIEW OF THE DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION MADE ON 12 DECEMBER 2003 ON THE SECTION 152ATA DIGITAL PAY TV ANTICIPATORY INDIVIDUAL EXEMPTION APPLICATIONS LODGED BY TELSTRA CORPORATION AND TELSTRA MULTIMEDIA BY: SEVEN NETWORK LIMITED (ACN 052 816 789) and C7 PTY LIMITED (ACN 082 901 442) File No 11 of 2003 RE: APPLICATION FOR REVIEW OF THE DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION MADE ON 12 DECEMBER 2003 ON THE SECTION 152ATA DIGITAL PAY TV ANTICIPATORY INDIVIDUAL EXEMPTION APPLICATION LODGED BY FOXTEL MANAGEMENT PTY LIMITED (FOR AND ON BEHALF OF THE FOXTEL PARTNERSHIP AND FOXTEL CABLE TELEVISION) BY: SEVEN NETWORK LIMITED (ACN 052 816 789) and C7 PTY LIMITED (ACN 082 901 442) JUSTICE GOLDBERG (President), MR G F LATTA and MR R F SHOGREN 13 DECEMBER 2004 MELBOURNE

SUMMARY 1. In accordance with the practice of the Australian Competition Tribunal in some cases of public interest the following summary has been prepared to accompany the Reasons for Decisions made today. The summary is intended to assist in understanding the outcome of these proceedings and is necessarily not a complete statement of the reasoning or the conclusions of the Tribunal. The only authoritative statement of the Tribunal's reasons is that contained in the published Reasons for Decisions which is being published today and will be available on the Internet at www.fedcourt.gov.au, together with this summary. 2. The matter before the Tribunal was a review of two decisions of the Australian Competition and Consumer Commission ("the Commission") on 12 December 2003, one in relation to Foxtel and the other in relation to Telstra. The Commission ordered that Foxtel and Telstra were exempt from the standard access obligations with which carriers and carriage service providers are obliged to comply if the carriage services they provide are declared under Pt XIC of the Trade Practices Act 1974 (Cth) ("the Act"). Declaration would make the declared services subject to a regulatory regime, including regulatory involvement in the setting of terms and conditions of access. The exemptions were anticipatory in the sense that Telstra and Foxtel were not yet providing the services in question, which accordingly were not yet subject to declaration. 3. Seven Network Ltd and C7 Pty Ltd applied to the Tribunal to review the two decisions. 4. The Commission was satisfied that the making of the orders would promote the long‑term interests of end‑users of carriage services or services provided by means of carriage services. In determining whether it should order that Foxtel and Telstra be exempt from standard access obligations, the Commission was obliged to have regard to the extent to which such exemption was likely to result in the achievement of: · The objective of promoting competition in markets for listed services; and · The objective of encouraging the economically efficient use of and the economically efficient investment in the infrastructure by which listed services are supplied. 5. The Commission was so satisfied because Foxtel and Telstra had given undertakings to the Commission pursuant to s 87B of the Act which set out the terms upon which they were prepared to provide access to access seekers to the digital pay TV services provided by Foxtel and the associated carriage services provided by Telstra which they were proposing to commence in the future upon obtaining orders that they were exempt from the standard access obligations. 6. In those undertakings Foxtel and Telstra undertook to provide access to their digital services once they commenced supplying a digital Subscription Television Carriage service by Telstra and the commercial retail digital cable subscription Television service by Foxtel. 7. The Tribunal was limited in its review to the information given to the Commission, or used by it, in connection with the making of its decisions. 8. The Tribunal was satisfied that by the date of the Commission's decisions 12 December 2003, information had been given to the Commission which showed that Telstra and Foxtel were going to commence supplying digital cable services at the earliest by March 2004 and at the latest by around April 2005. This is the same timeframe within which they would have been required to provide access under their s 87B undertakings if exemptions were not granted. In such circumstances the Tribunal was not satisfied that exempting Foxtel and Telstra from the standard access obligations was in the long‑term interests of end‑users of the relevant services. Although end‑users would gain access if the exemption order was made, they would also gain access if the exemption order was not made. In that case they would also have the opportunity to seek to have the Commission declare Foxtel and Telstra's services with the consequence that access seekers may be able to obtain more advantageous terms of access than were provided under the undertakings given to the Commission. 9. The Tribunal also had reservations about some of the terms upon which Foxtel and Telstra were providing access under their undertakings. These provisions related to the exclusion of interactive services from the services to be provided by Foxtel, the tie by Foxtel of access to its basic package, the period of the undertakings and the length of the exemption period which might at the option of Foxtel or Telstra extend to the end of 2015. There were also issues as to the pricing methodologies underlying the Foxtel and Telstra access prices. 10. The Tribunal was therefore not satisfied that the making of the exemption orders sought by Foxtel and Telstra would promote the long-term interests of end-users of the relevant services and refused the applications by Telstra and Foxtel for orders exempting them from the standard access obligations specified in s 152AR of the Act.