Australia: Federal Court backs ACCC roaming approach

Last Updated: 18 January 2018
Article by Angela Flannery

Most Read Contributor in Australia, September 2018

As discussed in our earlier briefing (see here) the Australian Competition and Consumer Commission (ACCC) determined in October 2017 that it would not declare a wholesale mobile roaming service under Part XIC of the Competition and Consumer Act 2010 (Cth) (CCA) at the current time.

Prior to the ACCC making its final determination, Vodafone Hutchinson Australia (Vodafone) had challenged the ACCC's processes in undertaking its inquiry in relation to that potential declaration. On the cusp of the Christmas break, the Federal Court handed down its decision in that case, dismissing the application and supporting the approach taken by the ACCC (Vodafone Hutchison Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCA 1549).

The Federal Court's decision means, for the foreseeable future, each of Australia's mobile network operators, that is, Telstra, Optus, Vodafone and, when it rolls out its network, TPG, will remain free to determine whether or not to provide wholesale roaming services to third parties.

Background

Under Part XIC of the CCA, which contains the telecommunications access regulatory regime, the ACCC is able to declare an "eligible service". In the past, the ACCC has used Part XIC to declare eligible services such as the 7 fixed line services provided over Telstra's fixed line copper network. Part XIC requires the ACCC, when looking at whether to declare a service, to consider whether the declaration will be in the long-term interests of end-users. The ACCC is required to hold a public inquiry under Part 25 of the Telecommunications Act 1997 (Telco Act) before a declaration is made.

The ACCC determined in 2016 that it would consider whether to declare a wholesale mobile roaming service under Part XIC, announcing a public inquiry on 5 September 2016. An issues paper was released for public consultation on 26 October 2016. On 5 May 2017 the ACCC issued a draft decision that it would not declare any mobile roaming services. The ACCC released the final report on its mobile roaming declaration inquiry on 23 October 2017, affirming its draft decision.

Basis of Vodafone challenge

After the draft ACCC decision was released, Vodafone commenced judicial review proceedings in the Federal Court challenging the ACCC's inquiry processes under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) and also sought common law relief.

Vodafone challenged the ACCC on the basis that the ACCC's issues paper contemplated a mobile roaming service could be declared for a specific geographic area, but did not definitely state what that geographic area might be and, similarly, that the draft decision did not focus on a specific mobile roaming service.

Vodafone's primary argument was that the relevant service to be declared needed to be specified when the ACCC commenced its public inquiry. In the alternative, if the relevant service did not need to be specified at that stage, then this was required by the time the ACCC invited public submissions about, and directed its attention to, the question of whether the making of a declaration would be in the long-term interests of end-users under Part XIC of the CCA.

Decision of the Federal Court

Griffiths J dismissed both of these arguments. His Honour found that the requirement for holding a public inquiry, as imposed under the CCA, is a distinct process to the making of the declaration. Although a public inquiry was a necessary precondition for a declaration to be made, such an inquiry did not need to have the same level of specificity as a declaration itself. Griffiths J held that Vodafone's interpretation did not sit comfortably with the provisions of either Part 25 of the Telco Act or the relevant sections of the CCA. The preferable interpretation of the provisions was that an inquiry could still be characterised as "about" a proposal to make a declaration, even if the declaration was only one of a number of permutations considered in the public inquiry process. Further, it would seem illogical to require the ACCC to start a new inquiry if, as a result of submissions it received in an inquiry process, it determined that the proposed specification of the relevant eligible service the subject of the consultation was inappropriate.

Griffiths J rejected Vodafone's alternative case, on the basis that it was not supported by the statutory scheme. Griffiths J also found that (like Vodafone's primary argument) this alternative case incorrectly assumed that the end result of a public inquiry process is that either the ACCC must determine to declare a specified eligible service or determine not to do so. Under the statutory scheme, the ACCC may terminate an inquiry at any time without making such a decision.

Consequences of the decision

Even if this challenge had been successful, it is not entirely clear what benefits Vodafone would have obtained. Vodafone sought orders under the ADJR Act directing the ACCC to not hold the inquiry under Part 25 of the Telco Act and that the ACCC's draft decision was affected by an error of law. Alternatively, Vodafone sought orders under common law quashing the draft decision and restraining the inquiry from continuing. Therefore, a successful challenge would not have resulted in any wholesale mobile roaming services being declared by the ACCC. The ACCC has a discretion as to whether to declare a relevant telecommunications service under Part XIC of the CCA. If the Federal Court had found in favour of Vodafone, it would seem that the ACCC might simply have decided not to recommence the process.

The decisions of the ACCC and the Federal Court mean it is likely Telstra will remain the mobile network operator able to offer services with the greatest geographic reach for quite some time. Given this market dynamic, Telstra's competitors in the mobile services market will need alternative strategies to compete, based on, for example, other aspects of service, add-ins or bundling. The introduction of 5G services may provide an alternative platform for competition in mobile services over the medium term.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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