Telstra Corporation Limited v Australian Competition Tribunal

Federal Court of Australia (Full Court)|2009-07-01|Before: Foster JJ

The application to the Tribunal and the Tribunal's reasons 100 The second respondent applied to the Tribunal under s 152AV for a review of the ACCC's decision. The Tribunal made the decision which is the subject matter of this review. It set aside the ACCC's decision to grant Telstra orders exempting it from its obligations under s 152AR of the TPA as set out in Appendices E to H and set aside the class exemption orders set out in Appendices I and J made on or about 22 August 2008. 101 All parties to this application agree that the Tribunal had no power to set aside the class exemption orders in Appendices I and J to the ACCC Report. The consequences of that error by the Tribunal will be later addressed. 102 It was put to the Tribunal that the ACCC or the Tribunal when reviewing a decision of the ACCC must make an order for exemption upon being satisfied that the order will promote the LTIE. The alternative position, so the Tribunal noted, was that the state of satisfaction which is required by s 152AT(4) is a condition that must be satisfied before an order for exemption is made "and the decision maker is still required to take all relevant considerations into account in deciding whether or not to make an order". 103 The Tribunal held that s 152AT(4) does not define the manner in which the power in s 152AT(3) is to be exercised. It held that the structure of the section was such that no duty lies upon the ACCC or the Tribunal when reviewing a decision of the ACCC to make an order for an exemption if the s 152AT(4) criterion is satisfied. 104 The Tribunal further held that it could not be accepted that the range of factors that the ACCC or the Tribunal was able to take into account in reaching the decision under s 152AT was "extremely limited". 105 It concluded on this aspect: Section 152AT does not specify any matters (save for the s 152AT(4) criterion) which the ACCC (or the Tribunal) must satisfy itself of before making or refusing to make an exemption order. The matter is otherwise left at large. The matters to be taken into account must be determined by implication and the subject matter, scope and purpose of Part XIC. It follows that it is for the ACCC (or the Tribunal) to determine the appropriate weight to be given to any relevant matter. (Reasons at [8]) Later in its reasons, it described this residual inquiry as "matters that go to discretion". It also observed that Telstra did not address the Tribunal on the question of discretion. 106 The Tribunal considered the manner in which the technology and services are delivered, and addressed the barriers to entry and expansion. 107 It noted that while Telstra's competitors had been given access to ULLS and LSS, Telstra's dominant position has not been materially reduced. It said that the explanation was that there are barriers which stand in the way of entry. Those barriers, in some cases, were capable of empirical analysis and, in other cases, were not. It identified the barriers to entry: (a) Telstra's advantage of owning the network, a well-known brand, knowledge of the customer base and the benefit of consumer inaction; (b) Telstra's ability to engage in behaviour that would strategically delay entry which will increase the entrant's cost; (c) exchange capping; (d) queuing; (e) frustrating the use of mediation and conciliation in resolving disputes about access; and (f) migrating of customers supplied with LSS-based services (bundled with a fixed voice service using LCS or WLR) to ULLS which provides both broadband and voice services and the delay occasioned. 108 The Tribunal recognised that the cost of the equipment, and in particular DSLAM equipment, was not a prohibitive barrier to competitively significant entry. The Tribunal noted that despite the barriers which it identified, there were a number of entrants who used DSLAM in order to access ULLS and LSS. That evidence was obtained from DSLAM tracker data which is gathered from websites of telecommunication service providers and reports of independent telecommunications market analysts. The second source was the information obtained by the ACCC pursuant to its RKR. Those two sources gave information for periods both prior to and subsequent to September 2007. 109 The Tribunal identified the number of competitors in each ESA and noted that there was at least one DSLAM competitor in each ESA the subject of the applications; there were two or more DSLAM competitors in 334 of the 387 ESAs; there were three or more DSLAM competitors in 270 of the ESAs; and more than four DSLAM competitors in 208 ESAs. 110 It did not know, because there was no evidence, the number of installed DSLAMs per ESA installed by each of the entrants. 111 The evidence did not allow the Tribunal to determine the extent of the spare capacity of the installed DSLAMs in total or in any of the particular ESAs and therefore the Tribunal could not determine the weight which should be given to the fact that the DSLAM infrastructure was capable of serving 2,483,673 lines and, of those lines, 1,439,794 were still available. 112 Also, because not all DSLAMs are capable of providing broadband services and standard voice services, the Tribunal could not ascertain the proportion of current voice service capable devices. It also noted that it was impossible to reach any conclusion regarding the available space in each exchange for the installation of new DSLAMs to accommodate service providers who wished to put in additional equipment. 113 The Tribunal noted that the increase in the number of entrants disclosed in the evidence and the aggregate size of their market share raised for consideration whether regulation was still required. It said: A decision to remove regulated access requires a balance to be struck between competing factors. On the one hand there is the risk that continued regulation will result in market distortions, high prices and fewer choices. On the other, there is the risk that premature deregulation will permit the still-dominant incumbent (and on any view Telstra still has significant market power with 89% of all fixed voice lines being supplied over Telstra's PSTN, of which approximately 80% are lines retailed by Telstra) to engage in anti-competitive conduct, which will distort the market in the long term. The choice to be made is between ex-ante regulation of access and prices and ex-post law enforcement to deter anti-competitive conduct. If there be any appreciable risk of harm to end-users, regulation will usually trump law enforcement: cf Re Telstra Corporation Ltd (No 3) (2007) 242 ALR 482, [316] and [326]. The decision should also balance the short-term benefits resulting from continued regulation, weighed against the potential for long term benefits that may flow from deregulation. (Reasons at [33]) 114 It addressed Telstra's argument for an exemption and, in particular, Dr Paterson's evidence. It noted that the ACCC supported the adoption of the rule of thumb that Dr Paterson advocated, although the ACCC opted for a three plus approach rather than a one plus decision rule which Dr Paterson advocated. 115 It also observed that the ACCC added as an alternative that an order for exemption should be granted for an ESA that has 14,000 or more addressable SIOs. The Tribunal also noted that Telstra relied upon the report from Professor Cave who had promoted the ladder of investment hypothesis. The Tribunal warned itself that a regulatory authority ought to be confident that in deciding to withdraw regulatory protection at a lower rung of the ladder, the regulator does not leave any entrant at the mercy of the incumbent. Moreover, the regulatory authority ought to be confident that adopting Professor Cave's hypothesis would not leave entrants facing higher barriers to entry than those entrants who came before them. 116 The Tribunal then turned its attention to the case put by Telstra. It said: The case put by Telstra, including its one plus rule, was directed to showing that the s 152AT(4) criterion (that deregulation would promote the long-term interests of end-users) had been satisfied. The ACCC's three plus rule or its alternative of an exchange with 14,000 addressable SIOs was directed to the same end. It is to be noted that Telstra did not address the Tribunal on how its discretion should be exercised if the s 152AT(4) criterion was met. This is, no doubt, because the discretion issue was only raised late in the day by the Tribunal itself, all parties (and the ACCC) having proceeded on the false premise that there was no discretion. (Reasons at [54]) 117 The Tribunal was of the opinion that there was little empirical evidence to support Telstra's argument that s 152AT(4) was satisfied. It said: In large measure the argument was founded simply on the view of many (if not most) industrial organisation economists that "competition is the best regulator" because regulation will inevitably produce lack of choice, inefficient investment and disincentives to innovate, whereas removing regulation will produce the opposite results. (Reasons at [55]) 118 The Tribunal rejected the arguments propounded by both Telstra and the ACCC based upon a rule of thumb. It was of the opinion that the competitive state of the market ought to be determined by reference to empirical evidence. It said: The problem with a fixed rule of thumb in the area of deregulation is that it is just a shortcut. Simple numbers-based rules of thumb are not uncommonly used as a screening device to indicate thresholds beyond which markets might ordinarily be expected to work competitively. But a rule of thumb is a static indicator only and reveals nothing about market dynamics over time. (Reasons at [58]) 119 It gave a number of reasons why evidence based on a rule of thumb approach did not properly identify the market dynamics and, in particular, the likely future behaviour by Telstra to present entrants and any potential entrants. It said: Put another way, it is vital to have reliable hard information on these matters as well as knowledge of the asset and management capacity of the entrants, their willingness and ability to be competitive in the market and the response of their rivals, before any authoritative statement can be made on whether entry has, or is likely to, promote competition in the market. (Reasons at [68]) 120 It concluded at [71]: There is simply no empirical evidence before the Tribunal from which it is possible to arrive at any, even any tentative, conclusion about market behaviour and whether entry is likely to produce a competitively significant long run impact in the relevant markets. 121 Having rejected Telstra's evidence and the ACCC's contentions, the Tribunal indicated what it described as a "possible framework". It said: It is hard to deny that, if it were possible, it would be very useful to formulate a set of rules that provide a roadmap for deregulation. If a roadmap were to be developed based on today's technology and knowledge, it would include at least the following eight factors: (a) the total number of addressable SIOs in the market; (b) the number of exchanges in which there is at least one entrant; (c) the number of entrants; (d) the total number of addressable SIOs broken down on an exchange by exchange basis in the subject exchanges; (e) the share of SIOs that the entrants have taken from the incumbent; (f) the physical capacity and operational willingness of the entrants to take more market share; (g) the cost and ease of installing new infrastructure; and (h) the capacity and technology status of each DSLAM in each exchange. Such an inquiry would at least provide a basis for drawing inferences on whether deregulation is likely to result in the achievement of the objective of promoting competition. (Reasons at [72]) 122 It concluded: The Tribunal is not satisfied that the making of the exemption orders sought by Telstra will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services. It is not, therefore, necessary to consider matters that go to discretion. Nor is it necessary to consider whether it is legitimate, for the ACCC or the Tribunal, to reach the satisfaction required by s 152AT(4) by imposing conditions or limitations. (Reasons at [74]) 123 It then said in relation to the orders made under s 152AS by the ACCC: The analysis and reasoning applies mutatis mutandis to the class exemption orders set out in appendixes I and J of the ACCC's final decision. The class exemption orders were made as a consequence of the ACCC's proposed orders in respect of Telstra and, like those orders, would have exempted service providers other than Telstra from the SAOs in respect of the LCS and WLR in any one of the subject exchanges. (Reasons at [75]) 124 It made the orders which we have mentioned above, including the orders purporting to set aside the class exemption orders. 125 As we have already noted, it was agreed by all parties that the Tribunal did not have the power to set aside the class exemption orders, there being no power in the Tribunal to review orders made under s 152AS or s 152ASA.

A need to dispose of this application urgently 126 It was contended by Telstra that this application had to be heard urgently, because otherwise, if Telstra were successful, it would not enjoy the fruits of victory. 127 Section 152AT(10) deems a decision to have been made in accordance with a carrier's or carriage service provider's application if a decision is not made by the ACCC within six months after receiving the application. Further, s 152AW(5) deems a decision to have been made by the Tribunal setting aside the ACCC's decision if the Tribunal does not make a decision at the end of six months after receiving the application for review. The application for review was dated 12 September 2008 and was received by the Tribunal on that day. 128 Telstra contended that if this Court were to quash the Tribunal's decision and remit the application for review to the Tribunal, the Tribunal would have to make a decision by 12 March 2009 or extend the period for review under s 152AW(6) for a period of three months. 129 Telstra further contended that it could not approach the Tribunal for an extension in advance of this Court making its orders for two reasons: first, because it could not tell the Tribunal what orders this Court might make; and secondly, because the Tribunal could not make an order under s 152AW(6) in circumstances where its decision was still on foot. 130 We do not need to decide whether those contentions are correct. We accept that the commercial imperative to which this Court should respond is to make its orders and publish its reasons so that Telstra does not succeed on this application but only obtain a pyrrhic victory. 131 Because of those matters, we have had to consider these important questions over a shorter period than we would have wished. That is not the fault of any of the parties but a result of the legislation. 132 If Telstra's contentions on this point are correct, and they appear to carry some weight, and the Tribunal makes a decision near the end of the six month period, an aggrieved party to the review may not be able in a practical sense to exercise its rights under s 5 of the ADJR Act or under s 39B of the Judiciary Act. It seems to us that s 152AW does not contemplate a further application for judicial review.

The construction of s 152AT 133 Telstra challenged the Tribunal's construction of s 152AT contending, as it had before the Tribunal, that if the ACCC (or the Tribunal when reviewing the ACCC decision) is satisfied that the making of the order will promote the LTIE, the order must be made. It contended that there was no residual discretion reposing in the regulator or the Tribunal in the event that the level of satisfaction required in s 152AT(4) was reached. The ACCC did not support that submission. In its written submissions, it contended that there was a limited discretion: see Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 and Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124. The second to seventh respondents to this application contended, as they had before the Tribunal, that if the ACCC reached the level of satisfaction required in s 152AT(4), the ACCC was entitled not to make the order if, in the exercise of the ACCC's discretion, it was of the opinion that the order should not be made. 134 The single object of Part XIC is contained in s 152AB(1) which is to promote the LTIE. There is no other object to be served by this Part of the legislation. In this respect, the provisions of s 152AT(4) are to be distinguished from the statutory provisions considered in Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 and Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124. 135 Of course, the ACCC and the Tribunal, in deciding whether an order would promote the LTIE, must have regard to the matters in paragraphs (c), (d) and (e) of s 152AB(2) but that is not to deny the fact that there is only a single object in Part XIC of the TPA. That proposition is reinforced by s 152AB(3) which limits the matters to which the ACCC and the Tribunal may have regard to those contained in s 152AB(2). 136 The purpose of s 152AL, which allows the ACCC to make a non-reviewable decision, is, like s 152AB(1), the promotion of the LTIE: s 152AL(3)(d). Consistently with s 152AB(1), a declaration is made under s 152AL when the ACCC is satisfied that the making of the declaration will promote the LTIE. An examination of s 152AL shows that the ACCC need only be satisfied of that matter to make the appropriate declaration. 137 The purpose of s 152AT (and the other sections which deal with applications for orders for exemption) is to relieve the carrier or carriage service provider who is bound by the s 152AL declaration from the consequences of that declaration insofar as the declaration requires the applicant to comply with s 152AR and, in particular, s 152AR(3). 138 Like s 152AL, and in conformity with s 152AB(1), the criterion for making the order exempting the party from the consequences of the s 152AL declaration is the promotion of the LTIE. 139 Section 152AT(4) precludes the ACCC from making an order under s 152AT(3)(a) unless satisfied that the making of the order will promote the LTIE. 140 In our opinion, s 152AT(4) is cast in its terms so that the ACCC should not make an order under s 152AT(3)(a) to relieve a carrier or carriage service provider from the consequences of the s 152AL declaration unless positively satisfied that the declaration, which had previously been made to promote the LTIE, should no longer constrain that carrier or carriage service provider. The effect of an order for exemption under s 152AT is to reverse the effect of the previous declaration made under s 152AL. In those circumstances, it is not surprising that s 152AT(4) says that the order should not be made unless the ACCC or the Tribunal is so satisfied. 141 We can see no room for any residual discretion reposing in the ACCC if it is satisfied that an order should be made to promote the LTIE. There is no further inquiry to be made. 142 Mr O'Bryan SC, who appeared for the second to seventh respondents, by way of example, suggested that the ACCC could be satisfied that the making of an exemption order would promote the LTIE but nonetheless refuse to make the order in the exercise of its discretion because of some illegal conduct which might be involved in promoting the LTIE. 143 In our opinion, if the ACCC or the Tribunal were presented with conduct of a kind which was illegal or unlawful, they could not be first satisfied that an order exempting the applicant would promote the LTIE. It would not be an exercise of discretion to refuse an application in those circumstances because it must be implicit in the statute that the promotion of the LTIE is by lawful means. Mr O'Bryan was otherwise unable to identify any circumstances where the ACCC might, in the exercise of some residual discretion, refuse to make an order exempting a carrier or carriage service provider under s 152AT where it was satisfied that such an order would promote the interests of the LTIE. 144 We think that there is no room for the exercise of discretion in a consideration of an application under s 152AT. If the ACCC or the Tribunal is satisfied that an order should be made exempting a carrier or a carriage service provider under s 152AT because such an order would promote the LTIE, then, in our opinion, the order would have to be made. That is consistent with the purpose of s 152AT, which is to relieve the applicant from the consequences of the declaration under s 152AL. It is also consistent with s 152AB(1) which spells out the single object of Part XIC, viz the promotion of the LTIE. 145 Insofar as the Tribunal has assumed that it has a residual discretion, in our opinion, the Tribunal was wrong. However, the Tribunal did not reach its conclusion by way of an exercise of discretion. It concluded that there was no empirical evidence to support Telstra's applications and that those applications should fail for that reason. 146 When an application is made under s 152AT, the question which is raised is whether an order should be made exempting the carrier or carriage service provider from the obligation to provide SAOs under s 152AR. That question is answered by determining solely whether an exemption order would be in the LTIE. 147 Another matter which arose on this application and which was argued before the Tribunal was the effect of s 152AT(5). As has already been observed, the Tribunal did not consider whether it could impose conditions or limitations so as to allow it to reach the satisfaction required by s 152AT(4) because it was not satisfied that the making of the orders exempting Telstra would promote the LTIE. 148 Mr O'Bryan contended that s 152AT(5) had no part to play unless the ACCC (or the Tribunal on review) was of the opinion that the making of the order will promote the LTIE or, if not of that certain opinion, at a point near to being of that opinion. He was not able to articulate the point at which s 152AT(5) would engage, save that the ACCC must reach some sort of prima facie opinion that an order exempting would promote the LTIE but has unarticulated reservations. 149 We cannot accept that contention. The purpose of s 152AT(5) is to give the ACCC a tool to fashion the appropriate conditions and limitations when it thinks that the application by the carrier or carriage service provider for an order exempting that carrier or carriage service provider ought to be made. The purpose of s 152AT(5) is to allow the ACCC to fashion appropriate conditions and limitations which would go towards promoting the LTIE. 150 In our opinion, it cannot be said that there is some threshold that must be reached by the applicant before the question of conditions or limitations arises. As we have already noted, the ACCC is not constrained to either grant or refuse the application. What the ACCC must do on an application is to consider whether it should make an order of the kind in s 152AT(4) and, in doing so, must at all times keep in mind whether the order could be made if appropriate conditions and limitations were imposed. 151 In fact, that is what the ACCC did in respect of Telstra's four applications in the present case. By contrast, the Tribunal did not consider at any time during its review of the ACCC's decision whether or not some conditions or limitations could be imposed so as to allow either the orders sought by Telstra or the orders made by the ACCC to be made or stand. Section 152AT(5) provides a valuable tool in the hands of a regulator which can be used to ensure that the regulator can be satisfied that an order will promote the LTIE. 152 In this case, the ACCC identified three barriers to entry which it thought, if they remained, would prevent it from being satisfied that an order would promote the LTIE. For that reason, it imposed the conditions and limitations to which we have referred. That, in our opinion, was appropriate. 153 The Tribunal considered that Telstra's application had to fail because it was not supported by empirical evidence. It was not prepared to accept expert evidence which proposed a rule of thumb. The question of satisfaction is for the ACCC and the Tribunal on review. Section 152ATA complements s 152AT as s 152ASA complements s 152AS. Importantly, s 152AT contemplates that the application which it authorises will assume the applicant may not yet be a carrier or carriage service provider. It also contemplates that no s 152AL declaration may have been made. Section 152ATA is forward looking. It may be impossible for an applicant under that section to adduce any empirical evidence or any hard evidence at all. An applicant may have to rely entirely on expert evidence of a predictive nature. As the section is complementary to s 152AT, the section provides a guide in our opinion to the nature and quality of the evidence that might support a successful application under s 152AT.

The grounds of the application 154 There are nine separate grounds relied upon by Telstra in its application for judicial review. Each ground is set out and dealt with in the paragraphs of these Reasons which follow. 155 In some respects, as Dr Griffiths SC recognised, the grounds overlap. We will deal with the grounds separately but observe, when it is appropriate, why the reasons in relation to one ground may impact upon another ground or other grounds.

Ground 1 In making the Decision, the First Respondent made an error of law by proceeding on an erroneous basis, or applying the wrong test, in determining whether it was satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the long-term interest of end-users of carriage services or of services provided by means of carriage services ("LTIE") for the purposes of s 152AT(4) of the TPA. 156 In particulars of Ground 1 provided by Telstra in its application, Telstra contended that the Tribunal had applied the wrong test and thus made an error of law when considering the LTIE by insisting that it could not be satisfied that the grant of the exemptions sought by Telstra was in the LTIE in the absence of empirical evidence as to the state of the relevant markets at the time Telstra's applications for exemption were lodged. Telstra argued in this Court that, by requiring such evidence as a starting point for assessing the criterion set out in s 152AB(2)(c) (the objective of promoting competition in markets for listed services) instead of focusing on the existence and height of barriers to entry to those markets and/or expansion in those markets, the Tribunal had applied the wrong test. 157 Telstra advanced four sub-arguments in support of this ground. These were: (a) The Tribunal adopted a presumption about the maintenance of existing regulation (and not making individual exemption orders) inconsistent with s 152AT(4) (Ground 1, particular (v));

(b) the evidentiary requirements imposed by the Tribunal are unduly onerous and demanding such that they are inconsistent with (and more demanding than) a test based on the legislative touchstones of "satisfaction:" and "promotion" (the language adopted in s 152AT(4)) and "likely", "promoting" and "encouraging" (the language adopted in ss 152AB(2)(c) and (e)) (Ground 1, particular (iv));

(c) various of the Tribunal's evidentiary requirements were inconsistent with the proper construction of the objective in s 152AB(2)(c) in that they were directed towards ensuring the protection of individual competitors and that competition will in fact be advanced as a result of the making of an exemption (Ground 1, particular (ii)); and

(d) the Tribunal's empirical evidentiary requirements directed towards providing satisfaction as to market outcomes and the like were inconsistent with, and go beyond, the established approach to assessing "competition", which is to focus on barriers to entry and expansion (Ground 1, particular (iii)). 158 The sub-arguments referred to in sub-paragraphs (b) to (d) above will be considered together. 159 In support of sub-argument (a), Telstra submitted that an essential part of the analytical enquiry required by s 152AT(4) is a comparison between the "future with" the exemptions and the "future without" the exemptions and an assessment, in the light of that comparison, of which state of affairs is in the LTIE. 160 We agree with this submission. 161 Telstra also submitted that there was no statutory presumption against making an exemption order pursuant to s 152AT(3)(a) and no legal onus lying on an applicant to rebut such a presumption. 162 We also agree with these submissions. 163 In support of the proposition advanced as part of sub-argument (a) that the Tribunal had, in fact, applied a presumption in favour of regulation, Telstra relied upon certain observations made by the Tribunal when comparing the benefits of regulation and deregulation and the benefits of regulation over law enforcement. 164 The remarks of the Tribunal relied upon by Telstra in support of this sub-argument do not, in our view, betray a bias or presumption on the part of the Tribunal in favour of the maintenance of existing regulation. 165 We do not think that the Tribunal approached its consideration of the applications before it with such a bias in favour of the existing state of affairs. Accordingly, we do not think that Telstra has made out sub-argument (a). 166 We now turn to deal with sub-arguments (b), (c) and (d). We have set out at [120] above the conclusion which the Tribunal reached at [71] of its reasons. In our consideration of Ground 2 below, we will discuss whether that conclusion was correct. 167 However, the arguments advanced by Telstra which we are presently considering proceed upon the basis that, in expressing itself in the way in which it did at [71] of its reasons, the Tribunal imposed an evidentiary standard upon Telstra which cannot be supported and which was not authorised by the terms of s 152AB and s 152AT. 168 Telstra submitted that: (a) The language of ss 152AB and 152AT of the TPA was language which recognised and assumed that so called "hard" evidence might not be available in every case; (b) The language of the statute relevantly did not mandate that particular classes of evidence needed to be tendered in support of any particular exemption applications under s 152AT; (c) The hard and fast minimum requirements spelled out by the Tribunal at [72] of its reasons ignored the difficulties which ordinarily will confront an applicant for exemption in the position of Telstra in attempting to gather and present to the decision maker evidence of the kind required by the Tribunal in this case. 169 Telstra submitted that the concept of "competition" was central to the TPA although not defined in it. It submitted that the central question in identifying market power and thus competitive effects is the existence and height of barriers to entry (see Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 at 190 and 201). It further submitted that it is both entry in fact and the threat of entry which operate as the ultimate regulator of competitive conduct (Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169 at 189). 170 These submissions, in turn, led to a submission in the following terms: Accordingly, on the proper construction of the criterion in s 152AB(2)(c), and thus s 152AT(4) "the objective of promoting competition in markets for listed services" is to be assessed having regard to the existence of barriers to entry and expansion. This is because it is only where it is not possible for new entrants to participate in the market that an existing participant may have market power, and thus be in a position to affect competition. Accordingly, this will inform the assessment of the likelihood that an exemption will enhance conditions for competition. The existence of these barriers, so it was submitted, must be considered "in the long run". 171 Telstra submitted that the above submissions encapsulate the relevant tests thrown up by objective (c) of s 152AB(2) and that it addressed those tests in its evidence both before the ACCC and before the Tribunal. Telstra submitted that, in reaching its ultimate conclusion that it was not satisfied that the making of the claimed exemption orders would promote the LTIE, the Tribunal demanded evidentiary requirements and standards of Telstra which far exceeded those which were authorised by the relevant provisions of Part XIC of the TPA. Thus, so it was submitted, the imposition of those requirements by the Tribunal demonstrated that the Tribunal had applied the wrong test in assessing the question of competition for the purpose of considering objective (c). 172 Chime submitted that, whereas some of the submissions made by Telstra referred to in [168] to [171] above were undoubtedly correct, the Tribunal had not applied an evidentiary test which was not authorised by Part XIC of the TPA. 173 In our view, a critical part of the Tribunal's reasoning leading to its ultimate decision to set aside the exemption orders made by the ACCC was its holding that, in order for Telstra to satisfy the requirements of s 152AT(4), it was necessary for Telstra to adduce empirical evidence before the Tribunal from which it would be possible to arrive at conclusions about market behaviour both as it existed at the time the exemptions were under consideration and in the future. It was this approach that led to the formulation and articulation of the road map in the Tribunal's reasons at [72]. 174 To impose a requirement of empirical evidence which addressed the various matters set out in the road map as a minimum set of standards for an applicant for exemption to meet in a case such as the present is, as Telstra submitted, to apply the wrong test to the objective of competition required to be considered under s 152AB(2)(c). 175 In our view, the Tribunal made an error of law in this regard. That error was fundamental to its decision. Accordingly, in our view, the Tribunal's decision ought be wholly set aside on this ground pursuant to s 5(1)(f) of the ADJR Act and s 39B of the Judiciary Act.

Ground 2 Further or in the alternative to Ground 1, in making the Decision, the First Respondent: (a) made an error of law; (b) failed to take into account a relevant consideration it was bound to take into account; and/ or (c) exercised its power so unreasonably that no reasonable person could have so exercised the power, because the First Respondent set aside the ACCC Decisions on the basis that empirical evidence regarding observable market behaviour was required in order to be satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purposes of s 152AT(4) of the TPA in circumstances where such material was before the First Respondent and it did not consider that material. 176 The effect of this ground is that there was empirical evidence regarding market behaviour and the other factors identified by the Tribunal as critical for a determination of whether an exemption will promote the LTIE: see [56] of the Tribunal's reasons. 177 At [59] of its reasons, the Tribunal stated that the rules of thumb proposed by Telstra and the ACCC gave no indication of five categories of information which the Tribunal considered to be essential for an assessment of market dynamics over a period of time. Other categories of information relating to market behaviour were identified at [62], [66], [68] and [70] of the Tribunal's reasons. 178 The Tribunal's critical finding was set out at [71] of its reasons. Importantly, the Tribunal found that there was simply "no empirical evidence" before it from which the Tribunal could possibly arrive at a conclusion about market behaviour and whether entry is likely to produce a competitively significant long run impact in the relevant markets. We have reproduced the Tribunal's finding at [120] above. 179 Telstra submitted that there was evidence before the Tribunal as to each of the identified categories. Telstra also submitted that there was evidence before the Tribunal as to each of the eight categories of information referred to in the Tribunal's suggested roadmap. We have reproduced the Tribunal's observations about the roadmap and its suggested minimum content at [121] of our reasons. Telstra's submissions on this ground were largely supported by the ACCC. 180 Chime's response to this ground of review accepted that there was material before the Tribunal for some or all of the categories of information. However, the gravamen of Mr O'Bryan's submissions was that the material was not really responsive to the Tribunal's requests for empirical evidence or was so weak as to be of no assistance in relation to the questions posed by the Tribunal. 181 This ground of review therefore turns largely upon the effect of the statement made by the Tribunal that there was "simply no empirical evidence" from which it could arrive at a conclusion. 182 It seems to us that this statement was expressed in absolute terms. A fair reading of the statement does not suggest that the Tribunal's conclusion was based upon a consideration and weighing of the evidence relied upon by Telstra, although it is true, as was submitted by Chime, that some of that evidence was adverted to in the Tribunal's reasons. 183 The issue which is therefore raised is whether, having identified certain evidentiary requirements, the Tribunal fell into reviewable error by failing to have regard to the evidence adduced by Telstra in answer to the Tribunal's requirements. 184 This ground of review may be characterised as falling under two established heads of jurisdictional error. The first is a failure to take into account relevant considerations. This arises because Telstra contends that the effect of [71] of the Tribunal's reasons, when read in light of its view that empirical evidence was required to be adduced, was that it failed to consider evidence that it was bound to consider: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 40-41; Linett v McIntyre (2002) 117 FCR 189 at [34]. 185 The second head of jurisdictional error is a failure to make a finding on a claim raised by the evidence which could be dispositive of the application; Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 at [24]; NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2005) 219 ALR 27 at [55] - [58], [63]. 186 Telstra provided us with a document containing detailed references to the material before the Tribunal on the indicators of a competitive market and the "roadmap" to deregulation. 187 The ACCC's submission was to similar effect. It submitted that there was empirical evidence of market behaviour adduced before the Tribunal as well as evidence of many of the factors falling within the "roadmap". The ACCC's submissions were also supported by detailed references to the evidence contained in the 13 volumes comprising the Court Book. 188 Once it is accepted, as was conceded by Chime, that there was material before the Tribunal addressing many of the factors which the Tribunal considered to be mandatory, it is inevitable that this ground of review must succeed. 189 The issue is not whether that material was of probative value, or the weight to be given to it. Rather, the issue is whether, having identified evidentiary requirements which it considered (correctly or incorrectly) to be mandatory, the Tribunal fell into error in failing to consider the evidence. The answer to that question is yes. 190 Chime's concession makes it unnecessary for us to set out in any detail the evidence which Telstra or the ACCC put before the Tribunal relating to the requirements which the Tribunal identified. However, we will refer briefly to some of the material. 191 Before turning to this material, we should add that we reject Chime's submission that the Tribunal did not consider the "roadmap" to be a mandatory requirement. It is true that the Tribunal said at [73] of its reasons that the adoption of a definitive prescriptive roadmap would be likely to lead to error. But it is clear in our view from [72] of the Tribunal's reasons that it considered the eight factors there set out to be the minimum necessary factors for which empirical evidence was required. 192 We also reject Chime's submission that Telstra failed in the Tribunal because it was unable adequately to explain the competitive conditions in each of the 387 ESAs. 193 In order to make good this submission, Chime pointed to a number of observations made by the Tribunal as to the deficiencies in Telstra's evidence. These observations included the Tribunal's statement at [29] that the information supplied by Telstra did not allow the Tribunal to determine the spare capacity of the installed DSLAMs in any of the exchanges. 194 But in our view, these observations by the Tribunal do not detract from its finding at [71] that there was no empirical evidence to enable it to reach a conclusion about market behaviour. The view that we have reached is that there was empirical evidence on this question and on many of the matters referred to in the "roadmap". Of course, the weight to be given to the evidence was for the Tribunal to determine. However, when [71] and [72] of the Tribunal's reasons are considered in light of the material to which we have been taken, in our view the Tribunal did not undertake the necessary process of considering that evidence. 195 Moreover, it is clear enough from [35] and [36] of the Tribunal's reasons that it did not reject Telstra's application on the ground suggested by Chime, that is to say, the absence of evidence on an ESA by ESA basis. At [35], the Tribunal observed that the parties examined the competitive dynamics at a "geographically disaggregated level". But at [36] the Tribunal neither accepted nor rejected that approach. 196 We will deal first with the roadmap and then deal with the indicators of a competitive market identified in [56] of the reasons. 197 Chime accepted that there was material before the Tribunal showing the total number of addressable SIOs for the periods to September 2007, December 2007, March 2008 and June 2008. Telstra acknowledged that while information concerning total SIOs in each ESA extended back to March 2004, the information on "addressable SIOs" was calculated only in respect of periods between September 2007 and June 2008. 198 Whether or not there was an absence of any, or any relevant, data in respect of earlier periods is not to the point. It is plain from Chime's concession that there was empirical data dealing with this issue. 199 Chime acknowledged that there was information before the Tribunal on the number of exchanges in which there was at least one entrant, and the number of entrants. This disposes of the second and third items in the roadmap. 200 The fourth item in the roadmap is the total number of SIOs broken down on an exchange by exchange basis. This is covered by what we said about the first factor, i.e., the total number of addressable SIOs. 201 The fifth item in the roadmap is the share of SIOs that entrants in the market have taken from Telstra. In a document dated 12 November 2008 from Telstra to the Tribunal, Telstra stated that it was possible to determine the number of ULLS and LSS lines attributable to each access seeker that has installed DSLAMs in the 387 ESAs from September 2007 to June 2008. 202 Telstra also stated in the document that it was possible to determine the share of the total SIOs for access seekers in each ESA. 203 The information provided by Chime to the Tribunal in a document dated 11 November 2008 appears to be to the same effect as Telstra's document. Chime stated that the CAN RKR data can be used to calculate the share of the total SIOs for each ESA represented by SIOs attributed to each access seeker. 204 In light of that statement by Chime to the Tribunal, we reject Chime's submission to us that the information in respect of this factor was not available. There was plainly some information, as Chime conceded in its document provided to the Tribunal on 11 November 2008. 205 The sixth item in the roadmap is the physical capacity and operational willingness of the entrants to take more market share. 206 Telstra relied on information set out in Table 3 of its document provided to the Tribunal on 12 November 2008. The table presented aggregated data from information previously provided to the Tribunal in respect of 371 ESAs that were the subject of Telstra's July 2007 application. 207 We do not think it is open to Telstra to rely on this information under Ground 2 because the Tribunal specifically referred to it at [29] of its reasons. The data indicated the total spare capacity of access seekers lines across the 371 ESAs. The Tribunal considered that the number of spare lines said nothing about capacity. 208 However, there was other evidence before the Tribunal dealing with the issue of physical capacity and operational willingness to which we were taken in some detail by Dr Griffiths. That information was contained in a confidential "Product Roadmap Discussion" provided to the Tribunal by Chime. 209 This document contains estimates of the capital cost of deploying and operating a multi-service access node (MSAN). It includes estimates of the time which would be required to recoup the expenditure and the minimum investment criteria. The information did not record the costs on an ESA by ESA basis but it did include a risk analysis of the cost of migration from LSS to ULLS. 210 Chime's Product Roadmap Discussion therefore contained information going to the physical capacity and operational willingness of entrants to take additional market share. It also contained information as to the cost and ease of installing new infrastructure which is the seventh item on the Tribunal's roadmap. 211 The Tribunal referred at [24] to the low cost of DSLAM equipment and to evidence which suggests the time period over which an entrant could make a return on its investment. It is true that the Tribunal found at [22] that Telstra could engage in behaviour that will strategically delay entry and that there are other practical difficulties in obtaining space near a capped exchange and in connecting with an exchange. Indeed, the Tribunal identified some of the barriers to entry which account for Telstra's dominant position in the national market. But we do not consider that this is an answer to Telstra's submission that there was empirical evidence on this issue which related to the 387 ESAs in question. 212 The eighth category was the capacity and technology status of each DSLAM in each exchange. The ACCC submitted that there was no evidence of this but there was some information before the Tribunal on access seekers' DSLAM capacity utilisation. In our view, Telstra's detailed submission on this issue is to the same effect. 213 The principal indicators of a competitive market referred to by the Tribunal at [56] are: · the number of new entrants; · the growth of the entrants' market share; · an increase in the range and quality of the services required; and · a reduction in the price of services. 214 There was information in the CAN RKR data which showed the number of ULLS and LSS lines supplied to each access seeker in each ESA. There was also information as to the number of addressable SIOs in each ESA for the periods from September 2007 to June 2008. We referred to this at [197] above. This information therefore contained reference data from which the number of new entrants could be identified, at least over the period from September 2007 to June 2008. 215 Moreover, as the ACCC submitted, this data enabled a calculation to be made of the market share obtained by each access seeker. 216 Telstra listed in some detail in its written submission the information that was available on the increase in the range and quality of services provided. Chime accepted that the information referred to by Telstra was available. 217 Chime's submission that the information was "sparse" and that it did not enable any conclusion to be drawn about the LTIE does not provide an answer to this ground of review. The same conclusion applies to Chime's acknowledgment that there was information available on a reduction in the price of services over time. 218 Telstra's detailed reference document also dealt with information identified by the Tribunal in [58] and [59] as going to market dynamics over time as well as other information identified by the Tribunal as relevant: see [62], [68] and [70] of the Tribunal's reasons. 219 We have not considered the voluminous references provided by Telstra on the issue referred to in the preceding paragraph. It is sufficient to say that Chime conceded that some of the information was available, although it submitted that some was not, or that it was "sparse" and did not provide the information on an ESA by ESA basis. 220 This is covered by what we have said above. 221 We should add that although we have upheld this ground of review, it does not follow from what we have said that the Tribunal was bound to refer to every piece of evidence and every contention made by Telstra in its written reasons. Plainly, it was not: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [68] - [69]; Linett v McIntyre at [34]; Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 at [46]. However, the difficulty which has given rise to jurisdictional error in the present case is that the Tribunal's statement that there was no empirical evidence from which it could arrive at conclusions about market behaviour is not supported by the evidence to which we have referred.

Ground 3 In making the Decision, the First Respondent made an error of law by misconstruing and misapplying s 152AB(2)(c) of the TPA in determining whether it was satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purposes of s 152AT(4) of the TPA. 222 In its particulars of this ground, Telstra contended that the Tribunal had applied the wrong test and thus made an error of law, for the purposes of its consideration of the requirement in s 152AB(2)(c), by concentrating on the advancement of individual competitors rather than the promotion of competition as a process within the relevant markets. 223 This ground is related somewhat to Ground 1 in that it focuses upon the objective set out in s 152AB(2)(c). 224 Telstra submitted that competition is a process or state of affairs and is not concerned with the position or protection of individual competitors. It also submitted that the notion of "promoting competition" involves the idea of creating appropriate conditions or an environment for improving competition from what it would otherwise be and not as requiring satisfaction that an actual increase in the level of competition has already taken place or will definitely take place in the future (see Re Review of Declaration of Freight Handling Services at Sydney International Airport (2000) ATPR 41-754 at 40,775). 225 In our view, these submissions are correct. 226 In support of this attack on the Tribunal's decision, Telstra relied upon two particular paragraphs in the Tribunal's reasons, namely, [50] and [52]. Telstra also relied upon other particular paragraphs, including those in the Tribunal's reasons which contain its observations concerning the need to have detailed information establishing the spare capacity of installed DSLAMs. 227 In our view, these particular references relied upon by Telstra were no more than observations made by the Tribunal as part of its consideration of objective (c) in s 152AB(2). The matter which the Tribunal had under consideration was the existing state of competition in the relevant markets. In the course of considering that matter, it made reference to various specific matters concerning the nature of that competition and the evidence which it had (and did not have) demonstrating the extent of that competition. 228 We do not think that the Tribunal placed an impermissible emphasis on the protection of competitors rather than applying the appropriate test developed in its own jurisprudence as to the meaning of the concept of "promoting competition". 229 The real vices in the approach taken by the Tribunal were: (a) Its insistence upon having solid empirical evidence establishing the true state of competition at the time the exemption orders were under consideration; and (b) Its stepped approach to the application of the criteria set out in s 152AB(2) to (8) which led it to reject Telstra's exemption applications as a threshold matter because Telstra had failed to satisfy the promotion of competition objective (objective (c)). 230 We do not think that the Tribunal committed error by applying the wrong test for the promotion of competition in the sense raised by Telstra under Ground 3. 231 Accordingly, we are of the view that Telstra has not made out this ground as a separate matter.

Ground 4 In making the Decision, the First Respondent made an error of law by misconstruing and misapplying s 152AB in adopting a short-term, rather than a long-term view, for the purposes of determining whether it was satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise would promote the LTIE for the purposes of s 152AT(4) of the TPA. 232 In its particulars of this ground, Telstra listed several matters which it described as "short term"considerations of which account was taken by the Tribunal inconsistently with the requirements of the definition of the LTIE. 233 The particular matters relied upon are set out in [4(ii)] of Telstra's application: (ii) The First Respondent, in making the Decision, took into account short-term matters and found that it was required to balance short-term matters and long-term matters in making its decision, including by:

(A) construing and applying Part XIC on the basis that it accepts that mandated access to a telecommunications network which increases competition in the short term may harm competition in the long term and thus be harmful to end-users (paragraph 5 of the Reasons);

(B) taking into account the consideration that regulated wholesale access may deliver benefits to end-users in the short-term (paragraph 32 of the Reasons);

(C) finding that a decision to remove regulated access requires a balance to be struck between competing factors and such a decision should balance the short-term benefits resulting from continued regulation, weighed against the potential for long-term benefits that may flow from deregulation (paragraph 33 of the Reasons); and

(D) finding that there was inadequate information available for it to be able to conclude whether DSLAM based entrants were capable of providing short-run accommodation to existing rivals faced with an unregulated LCS or WLR (paragraph 62 of the Reasons and, concomitantly, paragraph 52 of the Reasons).

234 There is no doubt that the overarching objective of Part XIC is to promote the LTIE and thus it is to the "long-term" to which attention must be directed. 235 In Re Seven Network Ltd (No 2) (2004) 187 FLR 373 at [119] to [131], the Tribunal held that the long-term, as referred to in s 152AB, is the period over which the full effects of the Tribunal's decision will be felt, with players adjusting to the decision, including by entering and exiting the relevant markets. 236 Telstra submitted that: In the present case and consistent with these authorities, the statutory test required the Tribunal to consider, looking forward, whether the exemptions would create conditions for the promotion of competition in the long term. 237 We agree with that submission. 238 However, the real questions thrown up by this ground are: did the Tribunal fail to pay due regard to the long-term and focus inappropriately on the short-term and, if so, should its decision be set aside on this ground? 239 At [32] and [33] of its reasons, which are found in a section of those reasons dealing with certain facts concerning the installation of DSLAMs, the Tribunal said: Hence mandatory wholesale access can be inefficient in a network industry, especially one in which the incumbent continues to provide both wholesale and retail services. Nonetheless, regulated access does prevent the incumbent from abusing its position of power and may deliver benefits to end-users, at least in the short term.

A decision to remove regulated access requires a balance to be struck between competing factors. … 240 The Tribunal then made some observations concerning the competing considerations relevant to a continuation of regulation, on the one hand, and premature deregulation, on the other hand. At the end of [33] of its reasons, the Tribunal then said: The decision should also balance the short-term benefits resulting from continued regulation, weighed against the potential for long-term benefits that may flow from deregulation. 241 Later in its reasons at [62], when criticising Telstra's simplistic rule of thumb approach to the question of the promotion of competition, the Tribunal said: But there is no hard information about the minimum or maximum capacity of the DSLAMs installed by an entrant at any exchange. In the absence of hard information about the capacity of the installed DSLAMs, it is not possible to conclude whether an entrant with one or more DSLAMs is capable of providing: (a) any competitive constraint on the incumbent (Telstra); (b) accommodation to a further entrant who is unable for whatever reason to access the exchange with its own DSLAM; and (c) short-run accommodation to existing rivals who, faced with an unregulated LCS or WLR, may be forced to consider engaging in further infrastructure-based competition in lieu of resale-based competition. 242 Finally, towards the end of its reasons, the Tribunal seemed to us to focus on both the short run and the long run, suggesting that new entrants into the relevant markets would have to convince the end-users that they have the capacity to satisfy the end-users' demands in both the short run and the long run (see, for example, [70]). 243 In our view, what is required by ss 152AB and 152AT is not some balancing between the short-term and the long-term but rather due regard to the LTIE. 244 In any given case, this may well involve consideration of the existing state of the market and the future impact of the particular thing under consideration, both in the immediate future and over the longer term. The reference to the short-term, in such a context, would not necessarily be an error or involve a misconstruction of the requirements of s 152AB. 245 In the present case, as will be apparent from our consideration of Ground 7, the Tribunal failed to pay appropriate regard to all of the objectives mandated by s 152AB(2) and thus failed to meet the requirements of the statutory test. 246 In this respect, it may be said that it failed to pay appropriate regard to the long-term. However, we do not think that the references relied upon by Telstra as indicating an undue or inappropriate focus on the short-term with a concomitant disregard for the long-term makes out Ground 4 as a separate matter. The Tribunal focussed on the present state of competition in the relevant markets and found Telstra's evidence going to this aspect unsatisfactory and lacking weight. It regarded proof of the existing state of competition by empirical evidence as the starting point for any consideration by it of objective (c). Because it was not satisfied that Telstra had met the Tribunal's expectations in this regard, the Tribunal did not move on to consider any other matter. This was an error, not because of a misplaced focus on the short-term, but rather because it involved the application of the wrong test in the sense discussed in respect of Ground 7 below. 247 Accordingly, we do not think that Telstra has made out this ground as a separate matter, although some of the considerations advanced by Telstra in support of this ground are relevant to our consideration of Grounds 1, 3 and 7.

Ground 5 248 Ground 5 need not now be considered as it was abandoned before the hearing commenced.

Ground 6 In making the Decision, the first respondent made an error of law by misconceiving the nature of its jurisdiction and the scope of its powers and thereby disabling itself from considering whether the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purpose of s 152AT(4) of the TPA. (This ground constituted the basis for the challenge to the Tribunal's decision to set aside the class exemptions.) 249 There was no application before the Tribunal to review the decision of the ACCC to grant the two class exemption orders which it made on or about 22 August 2008 in favour of Telstra's competitors. Nor could there have been such an application. For the reasons already given, such a decision was not reviewable by the Tribunal. 250 The Tribunal took it upon itself to make the determination setting aside the class exemption orders set out in appendices I and J to the ACCC Report. 251 All parties on this application accepted that the Tribunal did not have power to do that which it did. 252 Telstra contended that by the purported exercise of that power, the Tribunal must have misinformed itself of the future "with" and "without" test by assuming that in the "without" world there would be no class exemptions when in fact the class exemptions would continue to apply. 253 That is logically sound but, in fact, the Tribunal never descended into an analysis of a future "with" and "without" world because it concluded at an antecedent point that there was no empirical evidence before it to support Telstra's application. 254 In those circumstances, we do not think that it could be said that the purported exercise of power by the Tribunal infected its decision to set aside the ACCC's orders in relation to the individual exemption orders. 255 We therefore accept the contention of the second to seventh respondents that that part of the Tribunal's decision can be severed from the part of its decision which it had jurisdiction to make. In our opinion, if this were the only matter that Telstra was able to establish on this application, there would be no reason to remit the matter to the Tribunal for further consideration. However, for reasons already given and about to be given, we think there are other reasons why the matter should be remitted.

Ground 7 In making the Decision, the First Respondent failed to observe procedures which were required by law to be observed in connection with the making of the Decision, and failed to take into account a relevant consideration it was bound to take into account, because it failed to have regard to the objective of encouraging the economically efficient use of, and the economically efficient investment in, relevant infrastructure as required by s 152AB(2)(e) of the TPA in determining whether it was satisfied that the making of individual exemption orders (in the terms of the Telstra Applications, the Individual Exemptions or otherwise) would promote the LTIE for the purposes of s 152AT(4) of the TPA. 256 The particulars of Ground 7 were as follows: (i) In making the Decision, the First Respondent failed to have regard to:

(A) the legitimate commercial interests of the Applicant (as the supplier of the LCS and the WLR) as required by s 152AT(4) and ss 152AB(2)(e) and 6(b) of the TPA; and

(B) the incentives for the economically efficient use of, and the economically efficient investment in, relevant infrastructure, with and without the making of individual exemption orders, as required by s 152AT(4) and ss 152AB(2)(e) and 6(c) of the TPA.

(ii) In the result the Decision is invalid (or liable to be set aside) as infected by jurisdictional error at general law and on the grounds stated in s 5(1)(b) and/or ss 5(1)(e) and 5(2)(b) of the ADJR Act. 257 Telstra contended that the Tribunal applied the wrong test and thus made an error of law by considering only the first of the objectives set out in s 152AB(2)(c) to (e) of the TPA (the objective of the promotion of competition) and by ignoring the remaining objectives (especially objective (e)). Telstra argued that the Tribunal concluded that it was not satisfied that the first objective had been met and thereafter failed to pay any regard to the requirements of s 152AB(2)(e) as further explained by ss 152AB(6), 152AB(7), 152AB(7A) and 152AB(7B). 258 The proposition advanced by Telstra was that, in the present case, the Tribunal was bound to consider each of the objectives set out in ss 152AB(2)(c) and 152AB(2)(e) in the manner required by s 152AB(2) and to determine whether, having weighed all of the relevant considerations, Telstra's applications for exemption met the requirements of the LTIE. 259 Section 2 of the TPA is in the following terms: The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. 260 Part XIC of the TPA gives effect to that general object by mandating a further and more specific single object in respect of access to telecommunications infrastructure and services viz the LTIE. 261 In determining whether a particular thing (in this case, whether the grant of individual exemptions to Telstra pursuant to s 152AT of the TPA) will promote the LTIE, the objective of promoting competition in markets for listed services is only one of the criteria to which the relevant decision maker must have regard. 262 We have described the relevant legislative provisions at [7] to [38] above. 263 In the present case, the relevant decision makers (the ACCC and the Tribunal) were obliged to have regard to: … the extent to which [the Telstra Exemption Applications] are likely to result in the achievement of … the three objectives set out in sub-paragraphs (c) to (e) of s 152AB(2). The three objectives set out in those sub-paragraphs constitute matters to which consideration must be given but also comprise the only matters to which consideration maybe given. 264 As is apparent from the terms of s 152AB(4) to (8): (a) Matters to which regard may be had in respect of objective (c) are set out in s 152AB(4); and (b) Matters to which regard may be had in respect of objective (e) are set out in s 152(6) and s 152AB(7A). 265 The matters referred to in ss 152AB(4), 152AB(6) and 152AB(7A) are not the only matters to which regard may be had by the decision maker when weighing objectives (c) and (e). 266 The ACCC and the Tribunal were thus obliged to consider and give appropriate weight to the extent(emphasis added) to which the making of the exemption orders was likely to result in (emphasis added) the achievement of each of the stated objectives. 267 When the expression "… regard must be had to …" is used in a statute in respect of a particular criterion or factor to be considered by a decision maker, the decision maker is bound to treat such a factor as a central or fundamental element in the making of the relevant decision (see the discussion of these principles by Rares J in Telstra Corp Ltd v ACCC [2008] FCA 1758 at [103] to [112]). 268 In the present case, the Tribunal was bound to have relevant regard to more than objective (c) (the promotion of competition). 269 It was common ground amongst the parties in this case that objective (d) (the objective of achieving any-to-any connectivity in relation to carriage services that involved communication between end-users) was not a matter which was likely to be affected in any way by the grant of the exemptions sought by Telstra. Once the decision makers considered that matter and came to a view that the parties were correct in the position which they had adopted in relation to it, no further consideration of objective (d) was required to be undertaken by the decision makers. It is not clear whether the Tribunal turned its mind at all to objective (d) or whether it simply accepted the position adopted by the parties without further consideration on its part. 270 A decision maker confronted with a decision of the type which obliges the decision maker to comply with the requirements of s 152AB(2) must have regard to the extent to which the subject matter of the decision maker's decision is likely to result in the achievement of each of the objectives set out in (c) to (e) of s 152AB(2), as amplified and explained in the succeeding sub-sections of s 152AB. In our view, no individual objective has primacy in terms of its weight or influence upon the relevant decision over either of the other objectives. Section 152AB(2) requires that the decision maker give consideration as to whether the thing under consideration is likely to result in the achievement of the objectives set out in sub-paragraphs (c) to (e) and, if so, the extent to which it is likely to result in the achievement of those objectives. Necessarily, the decision maker must have regard to each of the objectives and come to a view as to whether the particular thing will promote the LTIE and, if so, the extent to which it will do so. 271 In this case, both the ACCC and the Tribunal were both required to consider whether the individual exemptions claimed by Telstra, if made the subject of exemption orders, would promote the LTIE. Further, each of those decision makers was required to have regard to the extent to which those exemptions were likely to result in the achievement of each of the objectives set out in s 152AB(2). 272 In our view, the statute does not authorise an approach which accords primacy to objective (c). Even if it be the fact that the grant of the exemptions to Telstra in the present case may not be likely to or has not been demonstrated as likely to result in the achievement of the objective of promoting competition in markets for listed services, that circumstance does not, of itself, entitle or require the decision maker to cease the process of consideration required by s 152AB(2) and thus to pay no regard whatsoever to the other objectives set out in sub-paragraphs (d) and (e) of s 152AB(2). There may be tension between objectives. One may carry more weight in a given case than the others. But they must all be considered and weighed in every case. 273 In the present case, in our view, the Tribunal impermissibly confined itself to a consideration of objective (c) (the objective of promoting competition in markets for listed services). 274 In essence, the Tribunal concluded that it was not satisfied that the making of the exemption orders would promote the LTIE because it was not satisfied that the exemptions would be likely to result in increased competition in the relevant markets (see the extracts from the Tribunal's reasons at [113] and [116]-[122] above). It is apparent from a consideration of the Tribunal's reasons that it concluded that objective (c) was not satisfied in the present case because Telstra had failed to prove to a satisfactory level the existing competitive state in the relevant markets by tendering empirical evidence of that state of competition. In the Tribunal's view, Telstra's case for exemption therefore failed at the outset. 275 It is true that the Tribunal adverted to the "ladder of investment" hypothesis advanced by Professor Cave. But, in our view, it did so in the context of assessing whether that hypothesis could justify a conclusion on the part of the Tribunal that objective (c) of s 152AB(2) had been satisfied. In our judgment, the Tribunal did not give any consideration to objective (e). It should have done so. 276 The approach of the Tribunal in the present case was to conclude that it could not reach the requisite level of satisfaction for the purposes of s 152AT(4) unless it was satisfied that the grant of the exemption orders sought by Telstra would be likely to result in enhanced competition in the relevant markets, and that it could not be satisfied of that matter unless the existing state of competition was proven in the proceedings before it by way of empirical evidence. Having reached that conclusion, the Tribunal did not move on to have regard to objective (e). 277 In our view, by taking this approach to its consideration of the matter, the Tribunal applied an incorrect construction of s 152AB and of s 152AT. By approaching the matter in the way that it did, the Tribunal failed to consider the extent to which objective (e) might be achieved if the exemptions sought by Telstra were granted. In effect, the Tribunal gave primacy to objective (c), concluded that the objective had not been satisfied to any extent in the present case and then held that Telstra had not satisfied the test for the LTIE embodied in s 152AB. For that reason, the Tribunal concluded that it could not reach the level of satisfaction required by s 152AT(4). 278 In taking this approach, the Tribunal made an error of law which is reviewable by this Court. In our view, this error vitiates the Tribunal's decision in its entirety. Accordingly, the Tribunal's decision should be wholly set aside on this ground pursuant to ss 5(1)(e), 5(1)(f) and 5(2)(b) of the ADJR Act.

Ground 8 In making the Decision, the first respondent made an error of law by concluding that s 152AT(4) of the TPA does not impose a duty to make an individual exemption order in circumstances where it is satisfied that the making of such an order would promote the LTIE (or otherwise define the manner in which the power in s 152AT(3) of the TPA is to be exercised). 279 We think for the reasons given in [137]-[146] that this ground has been made out. We think the Tribunal proceeded upon the basis that there was some form of residual discretion reposing in the Tribunal to make or not make an order even where the Tribunal was satisfied that the making of an order exempting the applicant would promote the LTIE. 280 We think in a consideration of an application under s 152AT that the ACCC (or the Tribunal on review) must decide whether it is satisfied that an order exempting the applicant will promote the interests of the LTIE. That decision must be made by reference to paragraphs (c), (d) and (e) of s 152AB(2). Those are the only matters that may be considered: s 152AB(3). 281 However, in considering those particular matters in paragraphs (c), (d) and (e) of s 152AB(2), the ACCC must have regard to the matters in the further subsections of s 152AB. In that regard, the ACCC is not constrained by the matters referred to in those further subsections. 282 In addressing the question as to whether or not the ACCC is satisfied that the order exempting will promote the LTIE, the ACCC should consider whether there are conditions or limitations that could be imposed in the making of the order which would assist the decision maker to reach that level of satisfaction. 283 Once the decision maker has reached the level of satisfaction provided for in s 152AT(4), there is no residual discretion to refuse to make the application and the order must be made for the reasons previously given. 284 In our opinion, this ground has been made out. It is clear from the Tribunal's reasons that it believed that it had a residual discretion to refuse to make the application even if satisfied that an order exempting Telstra from its obligations under s 152AR would promote the LTIE. 285 To that extent, the Tribunal fell into error by assuming a jurisdiction it did not have and thereby acting in excess of jurisdiction.

Ground 9 In making the Decision, the first respondent made an error of law by concluding that it was not necessary to consider whether it could be satisfied that the making of individual exemption orders would promote the LTIE for the purposes of s 152AT(4) of the TPA by imposing conditions or limitations on such orders pursuant to ss 152AT(5) and 152AW(1) and (2) of the TPA. 286 Telstra contended that the Tribunal made the decision on the basis that it was not satisfied that the making of individual exemption orders sought by the applicant would promote the LTIE and therefore that it was not necessary to consider whether it was legitimate for it to reach the satisfaction required by s 152AT(4) of the TPA by imposing conditions or limitations. In that regard, it referred to [74] of the reasons which we have set out at [122] above. 287 Telstra contended that where the Tribunal is conducting a review under s 152AW of a decision of the ACCC which had concluded that an order exempting an applicant should be made but that it should be subject to limitations and conditions, the Tribunal was obliged to consider the imposition of conditions or limitations before concluding that it is able to set aside the ACCC's decision pursuant to s 152AW(1)(b) of the TPA. 288 We think the contention advanced by Telstra that the Tribunal did not apply its mind to the conditions or limitations before concluding that the decision made by the ACCC making the orders under s 152AT ought to be set aside must be accepted. We think that the Tribunal proceeded on the basis contended for by Telstra, in that it assumed that a consideration of conditions or limitations did not arise until after it had determined that it was satisfied that the making of the orders exempting Telstra would promote the LTIE. 289 For the reasons we have already given in relation to the construction of s 152AT(5), we think, with respect, the Tribunal erred. We reject the suggestion implied in the Tribunal's reasons that it is appropriate to proceed on a two stage basis: first, by determining whether it is satisfied that an order exempting would promote the LTIE; and secondly, if so satisfied, whether it is of the opinion that it ought to impose conditions or limitations. 290 We think the question of conditions or limitations must be approached at the same time as the ACCC (or the Tribunal on review) is considering whether it is satisfied that an order exempting will promote the LTIE. If it were otherwise and the two stage process were appropriate, then, of course, it would rarely be the case that any conditions or limitations would be imposed because the decision maker would have already reached the conclusion that the order which has been sought should be made because it would promote the LTIE. That would leave s 152AT(5) with little work to do. 291 It is our opinion that s 152AT(5) is always engaged in a consideration of any application under s 152AT or the consideration of any order which might be made under s 152AT(5). An instance of how s 152AT(5) can be used is, in our opinion, the way in which the ACCC used it on Telstra's applications to it. It has used the subsection for the purpose of imposing a regime which, at the very least, reduced the barriers to entry. 292 We think therefore, with respect, that the Tribunal asked itself the wrong question. The question that the Tribunal should have asked itself is whether it was satisfied that an order should be made exempting Telstra from its obligations under s 152AR(3) of the TPA subject to whatever conditions or limitations were appropriate that would promote the LTIE.

conclusion 293 For all of the above reasons, we think that the Tribunal's decision must be set aside and the matter remitted to the Tribunal to be decided according to law. Although Telstra has not succeeded on every point which it argued, it has succeeded in overturning the Tribunal's decision. We think that, in those circumstances, the second to seventh respondents should pay Telstra's costs of and incidental to the application before us. 294 The Tribunal filed a submitting appearance save as to costs. 295 The ACCC appeared before us and addressed the Court on a number of matters. We found those submissions most helpful. The ACCC was, of course, the primary decision-maker. 296 In our view, it would not be appropriate to visit the costs of the ACCC's participation in the matter upon the second to seventh respondents. We think that the ACCC should pay its own costs in relation to Telstra's application. Therefore, the orders of the Court will be: 1. Order that, pursuant to ss 5 and 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B(1A)(c) of the Judiciary Act 1903 (Cth): (a) the decision of the Australian Competition Tribunal made on 22 December 2008 in the matter of Applications under s 152AV of the Trade Practices Act 1974 (Cth) by Telstra Corporation Limited (Tribunal File No 2 of 2008) be set aside; and (b) those applications be remitted to the Tribunal for further consideration and determination according to law. 2. Order that the second to seventh respondents pay the applicant's costs of and incidental to the application. I certify that the preceding two hundred and ninety-six (296) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Lander and Foster.

Associate: Dated: 11 March 2009 Counsel for the Applicant: J E Griffiths SC with A J Payne and M Allars

Solicitor for the Applicant: Mallesons Stephen Jaques

Counsel for the Second to Seventh Respondents: N J O'Bryan SC with M J Hoyne

Solicitor for the Second to Seventh Respondents: Herbert Geer

Counsel for the Eighth Respondent: C Caleo SC with P Gray

Solicitor for the Eighth Respondent: DLA Phillips Fox

Trade Practices Act 1974(Cth)

Telstra Corporation Limited v Australian Competition Tribunal [2009] FCAFC 23

ADMINISTRATIVE LAW - judicial review of decision of the Australian Competition Tribunal - true construction of Part XIC of the Trade Practices Act 1974 (Cth) - errors of law and jurisdictional error committed by the Tribunal when reviewing a decision of the Australian Competition and Consumer Commission to grant exemptions in favour of the applicant from the requirement to afford access to declared telecommunications services - decision of the Tribunal set aside and remitted to the Tribunal for further consideration and determination according to law. TRADE PRACTICES - statutory interpretation - Part XIC of the Trade Practices Act 1974 (Cth) - telecommunications access regime and exemption from access obligations - interpretation of ss 152AB, 152AT and 152ATA - decision-maker obliged to consider all three objectives set out in s 152AB(2)(c) to (e) in determining whether a particular thing will promote the long-term interests of end-users of listed services - the long-term interests of end-users of listed services is the sole object of Part XIC - upon the true construction of s 152AT(4), the only matter calling for consideration is whether the decision-maker is satisfied that the making of the exemption order will promote the long term-interests of end-users of listed services - no residual discretion afforded to the relevant decision-maker under s 152AT(4) - objective set out in s 152AB(2)(c), being the objective of promoting competition in markets for listed services, does not authorise as a mandatory matter the imposition of an evidentiary test which requires the tender of empirical evidence as to the present state of competition in the relevant markets - the promotion of competition in s 152AB(c) is to be assessed by having regard to traditional concepts - decision-maker, when considering an application for exemption under s 152AT, obliged to consider whether the imposition of conditions or limitations pursuant to s 152AT(5) enable it to be satisfied that the exemption will promote the long-term interests of end-users of listed services - the Tribunal has no power to review decisions made by the ACCC pursuant to ss 152AL, 152AS and 152ASA. Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5 and 16 Federal Court of Australia Act 1976 (Cth) s 32 Judiciary Act 1903 (Cth) s 39B Telecommunications Act 1997 (Cth) s 56 Trade Practices Act 1974 (Cth) Part IV, Part XIB (Division 2) and Part XIC; ss 2, 152AB, 152AC, 152AH, 152AL, 152 ALA, 152AR, 152AS, 152ASA, 152AT, 152ATA, 152AU, 152AV, 152AW, 152AY, 152BB, 152BBAA, 152BBC, 151BU and 163A Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 cited Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 applied Linett v McIntyre (2002) 117 FCR 189 applied Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 applied Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 cited NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2005) 219 ALR 27 applied Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 applied Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169 applied Re Review of Declaration of Freight Handling Services at Sydney International Airport (2000) ATPR 41-754 cited Re Seven Network Ltd (No 2) (2004) 187 FLR 373 applied Re Sydney Airports Corporations Ltd (2000) 156 FLR 10 distinguished Sydney Airport Corporation Ltd v Australian Competition Tribunal and Others (2006) 155 FCR 124 distinguished Telstra Corp Ltd v ACCC [2008] FCA 1758 applied TELSTRA CORPORATION LIMITED (ACN 051 775 556) v AUSTRALIAN COMPETITION TRIBUNAL, CHIME COMMUNICATIONS PTY LIMITED (ACN 073 119 285), AAPT LIMITED (ACN 052 082 416), AGILE PTY LTD (ACN 080 855 321), MACQUARIE TELECOM PTY LIMITED (ACN 082 930 916), POWERTEL LIMITED (ACN 001 760 103), PRIMUS TELECOMMUNICATIONS PTY LIMITED (ACN 071 191 396) and AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

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