On 21 June 2023, the Australian Competition Tribunal (Tribunal) issued its determination in relation to a proposed agreement between Telstra Corporation Limited (Telstra) and TPG Telecom Limited (TPG). The Tribunal elected to affirm the determination made by the Australian Competition and Consumer Commission (ACCC) on 21 December 2022 – to dismiss the application for authorisation of the arrangement. TPG and Telstra have both confirmed that they will not appeal the Tribunal’s determination.
Part One of this article explored the Tribunal’s reasons for the determination. Those reasons show a careful consideration of the issues and represent a significant vindication for the ACCC in an area where it has faced challenges over the past few years. The determination may also provide guidance for regulators around the world when scrutinising network sharing deals in particular those that involve the sharing of spectrum. This part of the article explores these ongoing implications of the result.
Domestically, the Tribunal’s decision represents a major vindication of the ACCC, who have had a number of high-profile decisions overturned at the Tribunal and Judicial level in recent years including the Full Federal Court’s decision to overrule the ACCC in denying authorisation for the 2020 TPG/Telecom merger.
The Commission has denied two merger authorisations since ACCC Chair, Ms Gina Cass-Gottlieb commenced her term, and with the ANZ/Suncorp merger now also before the Competition Tribunal, the regulator will hope that the in-depth reasoning (with regard to both SLC and net public benefit) provided by the Tribunal in this decision will serve as a framework by which the Commission’s decision on ANZ/Suncorp will be upheld.
The decision by the Tribunal also vindicates the ACCC’s concerns with regard to Telstra’s dominance in regional Australia. It remains to be seen whether this decision will have an impact on any government initiatives that may come out of the Regional Mobile Infrastructure Inquiry. The ACCC provided its final report to the Minister in June 2023.
The scale and breadth of this determination by the Tribunal means it may well serve as a benchmark for regulators around the world considering network sharing arrangements particularly MOCN arrangements that involve the sharing of spectrum.
The Tribunal did not entirely rule out MOCN agreements as anticompetitive. In fact, it considered that there are strong commercial and economic incentives for the network operators to share mobile network infrastructure in regional areas, and appropriately structured arrangements are capable of delivering efficiency benefits without substantially lessening competition. It made clear that the determination should not be understood as indicating a contrary conclusion. The reason it made its decision in this instance was due to the highly concentrated market where a material reduction in the competitive constraint able to be imposed by the second largest competitor is likely to have the effect of substantially lessening competition.
As a result, those markets with few key competitors that already hold market power should approach spectrum sharing with caution. The common position from the Body of European Regulators for Electronic Communications (BEREC), notes that those looking to enter MOCN Agreements should do so with the general objective of preserving efficient infrastructure-based competition, service-based competition, better connectivity, and efficient use of spectrum. Of particular note, the common position says that consideration must be had to:
The above criteria are overwhelmingly similar to the bases on which the Tribunal affirmed the ACCC’s decision to decline authorisation of the Telstra and TPG agreement. It is therefore not unreasonable to envisage a future wherein the same reasoning adopted by the Tribunal is applied to determining the competitive effects of a MOCN agreement in the EU. In fact, the European Commission has already sought open commitments from involved companies to the above regarding an agreement between Deutsche Telekom and PPF in Czechia, at the risk of heavy fines. It may also be that when viewed in the context of the Tribunal decision, it becomes even more challenging for MNO’s in developed countries given that few countries present the geographical challenges that Australia does.
Nevertheless, network sharing will continue to be attractive to MNOs globally given the capital-intensive nature of 5G network rollouts and future plans for 6G. Put simply, industry cooperation may be necessary particularly for regional and rural areas, but legitimate competition concerns identified by regulators will need to be addressed. Markets with few competitors (particularly those where one exhibits market power) and significant rural or remote areas will likely look to the decision of the Australian Tribunal in assessing the competitive effects of a MOCN arrangement.
This will remain a space to watch as investment in next generation telecommunications infrastructure is advanced in developing nations and rural and regional areas globally.
For more information please contact: Thomas Jones, Matthew Bovaird or Benjamin Holmes.