The Trade Practices Act 1974 (Cth) and the Treatment of Cluster Markets in the Australian Telecommunications Industry

By Goss, Adrian | Melbourne University Law Review, August 2001 | Go to article overview

The Trade Practices Act 1974 (Cth) and the Treatment of Cluster Markets in the Australian Telecommunications Industry


Goss, Adrian, Melbourne University Law Review


[The nature of the Australian telecommunications industry and the consumer environment in which it operates are such that the proper definition of the relevant market in respect of specific products will often be difficult to ascertain. In many cases, it may be appropriate to treat telecommunications markets as being constituted by multiple, rather than single, products. Thus, the concept of `cluster markets' will often be relevant in the assessment of anti-competitive conduct within a telecommunications market.

This article argues that the Australian Competition and Consumer Commission's failure and Australian courts' lack of opportunity to articulate a set of criteria for determining when a market is properly defined as being constituted by a group of non-substitutable products calls into question the Australian Competition and Consumer Commission's ability to coherently and consistently exercise its significant powers under Part XIB of the Trade Practices Act 1974 (Cth).]

I INTRODUCTION

The concept of `the market' is central to identifying anti-competitive conduct within the Australian telecommunications industry for the purposes of Part XIB of the Trade Practices Act 1974 (Cth) (`the Act'). (1) The nature of that industry and the consumer environment within which it operates are such that the proper definition of the relevant market in respect of specific products will often be difficult to ascertain. In particular, consumer preference for bundled services and technological convergence suggests that the boundaries of the relevant market for individual services will often be unclear. In many cases, it may be appropriate to treat telecommunications markets as being constituted by multiple, rather than single, products. Thus, the concept of `cluster markets' will often be relevant in the assessment of anti-competitive conduct within a telecommunications market.

This article will outline the role of the market in the application of Part XIB of the Act. It will then consider the circumstances in which Australian and foreign courts have applied the concept of cluster markets. In particular, it will highlight the inadequate consideration given to cluster markets in Australia. Finally, it will outline the factors that make cluster markets especially relevant to the analysis of competition in the Australian telecommunications industry.

It is submitted that neither the Australian Competition and Consumer Commission (`ACCC') nor Australian courts have given adequate consideration to the `circumstances in which nonsubstitutes should be included in the same market.' (2) Those circumstances will, it is argued, be particularly relevant in determining the proper boundaries of telecommunications markets for the purpose of assessing anti-competitive conduct. The ACCC's failure and the courts' lack of opportunity to articulate a set of criteria for determining when a market is properly defined as being constituted by a group of non-substitutable products calls into question the ACCC's ability to coherently and consistently exercise its significant powers under Part XIB of the Act.

II THE MARKET IN AUSTRALIAN TRADE PRACTICES LEGISLATION

The purpose of the competition provisions in the Act is to regulate competition and market power. Part XIB of the Act prohibits carriers and carriage service providers (3) from engaging in anti-competitive conduct in a telecommunications market. Accordingly, Corones has characterised the process of defining the market as `a preliminary first step to identify entry barriers, calculate market shares and provide a context in which competition is to be analysed.' (4) Identifying the proper boundaries of the market within which relevant conduct occurs is, therefore, a tool for assessing anti-competitive conduct rather than an end in itself.

The importance of properly characterising the market cannot be over-emphasised. Ascertaining the boundaries within which a product competes necessarily entails understanding the competitive pressures and relative power of the participants within the market that is sought to be defined. …

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