On March 27 2000, Justice Tamberlin of the Federal Court of Australia handed down a ruling requiring Telstra Corporation Limited (Telstra) to provide Seven Cable Network Pty Ltd (Seven) and Television and Radio Broadcasting Services Australia Pty Ltd (TARBS) with access to its national cable network, which is provided and managed by Foxtel Management Pty Ltd (FOXTEL).
In an appeal against this decision brought by Telstra and FOXTEL on August 18 2000, the Full Federal Court upheld Tamberlin's decision and dismissed the appeal.
The appeal has raised important issues concerning the meaning and operation of some of the provisions of Part XIC of the Trade Practices Act 1974 (Cth) that established the national telecommunications access regime.
Under the access regime, where carriers and carriage service providers provide a 'declared service', they must comply with the standard access obligations in relation to those services. These standard access obligations facilitate the provision of access to a declared service by service providers so that they can provide carriage and/or content services. Importantly, access is limited in certain circumstances. One such exception is where the provision of access to the service would have the effect of depriving any person of a protected contractual right (in Section 152AR(4)(d)). Section 152AR(12) defines a 'protected contractual right' to mean a right under a contract that was in force at the beginning of September 13 1996.
Following a declaration by the Australian Competition and Consumer Commission (ACCC) in 1999 that the pay television carriage service which included Telstra's national cable network and the FOXTEL broadcast and operating system was a declared service, Seven and TARBS requested access to the services. Telstra and FOXTEL refused access on the basis that granting access would have the effect of depriving FOXTEL of a protected contractual right under Section 152AR of the act.
Essentially, the rights which Telstra and FOXTEL claimed to be protected were certain exclusivity and bundling rights conferred through joint venture arrangements. However, Tamberlin's decision concentrated on the existence of exclusivity rights. He held that the term 'protected contractual right' could include exclusivity and bundling rights
However at first instance, Tamberlin found that Telstra and FOXTEL had not concluded an enforceable contract by September 13 1996 (the relevant date) and were still negotiating the terms of the contract. Accordingly, Tamberlin held that there was no protected contractual right within the meaning of the act and, therefore, supply of the declared services to Seven and TARBS would not have the effect of depriving FOXTEL of a protected contractual right.
In reaching this conclusion, Tamberlin indicated that in view of the legislative background and express objective of promoting competition, 'protected contractual right' should be given a strict interpretation so as not to frustrate the purpose of the act.
On appeal, Telstra and FOXTEL contended that Tamberlin should have held that there was a binding and enforceable contract between Telstra and FOXTEL, capable of giving rise to a protected contractual right.
For reasons which differed from those of Tamberlin, Justice Beaumont also concluded that the appeal should be dismissed with costs. Beaumont took the view that in consideration of the facts, FOXTEL had a limited contractual right that was protected within the meaning of Section 152AR of the act. This was evident by an arrangement between the parties which conferred on FOXTEL exclusive access to the facility.
However, Beaumont indicated that it did not follow from this conclusion that there existed at September 13 1996 a conditional exclusive relationship, such that the provisions of Section 152AR(4) applied. The judge considered the meaning of 'deprived' in Section 152AR(4) and concluded that it should be given its ordinary meaning.
In addition, Beaumont concluded that Section 152AR(4) should be construed broadly and be applied only where the effects of providing access would be to deprive a person of the contractual right. In this case, he considered that the parties had considered and allowed for the introduction and implementation of the access regime and, accordingly, it was difficult to sustain the argument that the implementation of the access regime would have the effect of depriving FOXTEL of a protected contractual right.
As a result of the court's decision, Seven has now approached the ACCC to apply for access to Telstra's cable network.
For further information on this topic please contact Claudine Tinellis at Blake Dawson Waldron by telephone (+61 2 9258 6942) by fax (+61 2 9258 6999) or by email ([email protected]).
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