ACCC 2022 In Review | Technology, digital platforms and telecommunications
Competition and consumer issues in telecommunications were in focus again last year. When announcing the 2022 ACCC Compliance and Enforcement Priorities, Mr Sims, explained that the ACCC would continue focussing on:
- Seeking improvements to the information available to customers regarding telecommunications in rural and remote areas, particularly regarding coverage comparisons and the quality of services offered by different providers.
- Its work to develop a future National Broadband Network (NBN) regulatory framework and to deliver key outcomes, such as ensuring NBN Co Limited (NBN Co) has the opportunity to earn the minimum revenues needed to meet its legitimate financing objectives.
True to its word, both focus areas have seen significant attention from the ACCC over the last year.
For most of last year, the ACCC was considering a proposed network-sharing arrangement affecting regional Australia. It ultimately declined to authorise the arrangement, citing the likely detriments on long-term industry structure. As discussed further below, the applicants, Telstra and TPG, have appealed to the Australian Competition Tribunal, and the transaction has attracted significant interest from market participants.
Additionally, updates to NBN regulation continued in 2022. In particular, last year saw the ACCC consider variations proposed by NBN Co to the undertaking, which forms the basis for regulation of the NBN. These variations followed broader consultations on the future regulation of the NBN in 2021, culminating in a final report recommending that the NBN Co be regulated as a utility.
Meanwhile, the roll-out of the Consumer Data Right to an increasing number of industries continued, with the telecommunications sector and non-bank lenders joining the banking and energy sectors in being required to comply with the regime.
Finally, competition and consumer issues relating to digital platforms were a key compliance and enforcement priority for the ACCC in 2022 and included the ACCC examining online retail marketplaces and potential regulatory reform. In the following sections, we outline the ACCC’s key findings and observations from its two interim reports.
Next Steps for the NBN – NBN Co’s Special Access Undertaking
Following an extensive consultation process on the future regulation of the NBN in 2021, NBN Co proposed variations to its Special Access Undertaking (SAU) in 2022. The SAU plays a central role in regulating the NBN, setting the rules for broadband providers to access the NBN. In deciding whether to approve or reject the proposal, the ACCC must consider whether the variations will promote the long-term interests of end users and whether the terms and conditions are reasonable.
NBN Co lodged a variation in March 2022 seeking (among other things) to incorporate fibre-to-the-node and copper technologies within the SAU, change NBN Co’s key pricing commitments, and include a service standard framework. The ACCC noted a distinct lack of support for the proposed variation by the broader telecommunications industry. In response, NBN Co submitted an updated variation in November 2022 which it hoped would “reflect the changes in policy landscape”. In particular, NBN Co revised the pricing roadmap and pricing principles, supposedly to give retail service providers greater transparency and certainty over future prices and costs associated with NBN Co’s services. When submitting its revised variation to the SAU for the ACCC’s consideration, NBN Co suggested that,
[NBN Co] considers that the Variation is a comprehensive response to the concerns of RSPs … while ensuring that nbn retains the regulatory opportunity to be a sustainable commercial wholesale-only enterprise and to implement government policy
The ACCC released a further consultation paper on the revised SAU, noting that it still had questions about how certain parts of the revised SAU would promote the long-term interests of consumers and businesses. Submissions on the revised variation are open until February 2023.
A Broader Broadband – ACCC authorises amendments to Telstra-NBN agreements
The ACCC authorised the extension of existing agreements between Telstra and NBN Co to Telstra’s associated entities to reflect a restructure of the Telstra group, Telstra and NBN Co had previously entered into agreements to facilitate the rollout of the NBN, but the agreements did not include any of Telstra’s related entities. Telstra Group undertook a legal restructure in 2022. To support the restructure, Telstra and NBN Co applied for authorisation to amend the NBN agreements so that they could be spread across various entities of the restructured Telstra group. In publishing its decision to authorise Telstra and NBN Co giving effect to the amendments, the ACCC noted that the transaction was likely to result in public benefit in the form of increased shareholder value, largely from Telstra’s improved flexibility to capitalise on future value realisation opportunities.
ACCC declines to authorise spectrum sharing arrangement – Telstra and TPG appeal
The ACCC declined an application for the authorisation of a proposed spectrum-sharing arrangement in regional Australia lodged by Telstra Corporation Limited (Telstra) and TPG Telecom Limited (TPG). Telstra and TPG have appealed to the Australian Competition Tribunal, requesting the Tribunal set aside the ACCC’s determination and grant the authorisation.
Telstra and TPG planned to establish a multi-operator core network commercial arrangement under which Telstra would share its radio access network with TPG for the supply of 4G and 5G services in certain regional and urban fringe areas. Telstra and TPG submitted that the arrangement would result in public benefits from immediate network improvements, innovation and increased choice for customers within, and travelling to, such regional and urban fringe areas.
The ACCC disagreed – commenting in its determination that,
“The Proposed Transaction is likely to create enduring changes in the relevant markets where anything that alters the structure of the market can be hard to unwind via entry or expansion by other mobile network operators.”
While acknowledging that several public benefits were likely to flow from the transaction, including improvement in the TPG service offering and efficiencies for Telstra and TPG, the ACCC considered these did not outweigh the public detriments. The ACCC ultimately determined that the transaction would result in a lessening of competition because of a reduction in the abilities and incentives of mobile network operators to invest in infrastructure in regional and rural areas.
Telstra and TPG had offered a joint behavioural undertaking, and TPG had offered a separate behavioural undertaking to address the ACCC’s concerns. The undertakings would have enabled the ACCC to review the transaction again in eight years, and require TPG to retain a significant portion of its sites in the affected regional and rural areas. The ACCC considered the undertakings did not deal with the competitive concerns arising from the deal and, even if they did, were ambiguous, lacked key terms, and carried significant compliance and enforcement risks. The ACCC noted its experience with behavioural undertakings in the past, expressing concern that parties interpret ambiguous terminology to best serve their commercial incentives rather than in the spirit of the undertaking.
Telstra and TPG appealed to the Tribunal, arguing that the ACCC’s conclusions were incorrect. In particular, Telstra and TPG took issue with the ACCC’s conclusion that without the proposed transaction, there is a possibility that TPG would enter into a network-sharing arrangement with Optus, stating that it was “speculative and inconsistent with the evidence” put to the ACCC. Optus applied for leave to intervene as a party in the appeal proceedings on the basis that Optus’ position is highly relevant to the proper assessment of future competition in the relevant markets with and without the proposed transaction.
It remains to be seen whether the Tribunal will be convinced by TPG and Telstra’s reasoning and authorise the arrangement. In any event, interest in the proposed transaction is likely to remain high.
The Consumer Data Right continues to be rolled out on a sector-by-sector basis
The Consumer Data Right (CDR) regime was established in 2019. Aimed at empowering consumers to make informed decisions about the products and services they purchase and to promote competition through the facilitation of data sharing, the regime continued to gain traction in 2022. The ACCC facilitates the regime’s operation through technology solutions such as the accreditation register, while the Office of the Australian Information Commissioner enforces the privacy safeguards and CDR Privacy Rules.
In 2022, we saw further development of the CDR regime, including:
- Further rollout of the CDR regime: In 2022, the telecommunications and non-bank lenders sectors joined the banking and energy sectors in being ‘designated’ under (i.e. required to comply with) the CDR regime. Other areas of finance, including merchant-acquiring services, general insurance and superannuation, are intended to follow.
- Refusal of accreditation application: On 15 December 2022, the ACCC refused an application to become an accredited data recipient (ADR) for the first time. It found that the applicant, iSignthis Australia Pty Ltd, did not provide sufficient material concerning data security, insurance and whether it is a fit and proper person (a requirement to be an ADR). As of early 2023, there are 37 ADRs.
- Statutory Review of the CDR regime: The Final Report of the Statutory Review of the CDR regime was published in September 2022 and focused on implementation issues, the CDR regime’s role in the digital economy and the statutory framework. The report concluded that the statutory framework has been “broadly effective in the rollout of the CDR to date, and is sufficiently flexible to accommodate further changes to achieve CDR policy objectives”.
- Future direction of the CDR regime: The Strategic Assessment Outcomes Report published in January 2022 made six recommendations for the future implementation of the CDR regime, including that it becomes the ‘central nervous system’ of Australia’s data economy and that both an agile and consumer-centric approach be taken to the handling of CDR data. It also highlighted the benefits of including consumer government data within the CDR regime in future.
- CDR regulatory sandbox launched by the ACCC: The ACCC launched a ‘sandbox’ in July 2022 to provide current and prospective CDR participants with tools to test their solutions in a free and secure environment against existing mock solutions. It aims to allow participants to develop data-sharing sharing solutions in a flexible and cost-effective setting and to assist in improving data quality.
- Proposed reform to the CDR regime: The Treasury Laws Amendment (Consumer Data Right) Bill 2022 was introduced to Parliament on 30 November 2022 to implement ‘action initiation’ into the CDR regime. The amendments will enable consumers to direct ADRs to send instructions on their behalf for actions such as making a payment, opening and closing an account, switching providers or updating personal details across providers.
- Enforcement by the ACCC: The ACCC issued its first infringement notice for a CDR breach to the Bank of Queensland for failing to provide a service to facilitate CDR data sharing by the 1 July 2021 deadline. As a result, the Bank of Queensland paid a penalty of $133,200 in July 2022. In addition, the ACCC issued four infringement notices to ING Bank (Australia) for missing three rollout deadlines and making false and misleading representations about the services it provides under the CDR regime. In December 2022, ING Bank (Australia) paid $53,280 in penalties as a result of these infringement notices.
Digital platforms facing increasing scrutiny from the ACCC
The ACCC released its fourth and fifth interim report on the Digital Platform Services Inquiry in 2022. The Digital Platform Services Inquiry (Inquiry) was borne out of the ACCC’s Digital Platform Inquiry Final Report in 2019 and examines digital platform services, digital advertising services and data services. The 2022 report on general online retail marketplaces and reform followed its report on market dynamics and the use of 'choice screens' in search services and web browsers in 2021.
Lack of transparency in online marketplaces
The ACCC’s fourth interim report on general online retail marketplaces (Online Marketplaces Report) focused on the state of competition in Australia’s online retail marketplaces, with a particular focus on Amazon, Catch, eBay and Kogan. The Online Marketplaces Report considered concerns raised by consumers and third-party sellers on online marketplaces as well as the potential future risks posed by online retail marketplaces given the increasingly important role they play in the economy.
When publishing its report, Ms Cass-Gottlieb noted that,
“We believe consumers should be given more information about, and control over, how online marketplaces collect and use their data.”
Key findings and observations from the Online Marketplaces Report include:
- Online marketplaces lack sufficient transparency regarding the algorithms that dictate the display and ranking of products in those marketplaces.
- The growth of hybrid marketplaces (through which marketplaces sell their own products and those of third parties) raises concerns around upstream competition issues and limiting choice for consumers. Such marketplaces may use algorithms or policies to prioritise their own products over those of third parties.
- While no online marketplace currently dominates market share, the ACCC is likely to be keeping a close watch on any mergers in this sector, which may result in a dominant marketplace emerging.
Online marketplaces should expect proposed transactions and behaviour will attract closer attention from the ACCC. The ACCC also flagged that it was considering whether regulatory reform is required to address concerns associated with digital platform services.
ACCC examines harm from digital platforms
The ACCC examined potential regulatory reform in its fifth interim report (the Regulatory Reform Report). The report noted key competition and consumer issues in respect of digital platforms were:
- financial losses arising out of scams (see our Scams section of this report for further information)
- increased market concentration and instances of anti-competitive conduct
- reduced choice and innovation.
The ACCC recommended a range of measures to address harm from digital platforms to Australian consumers and small businesses. In particular, the ACCC recommended new laws requiring digital platforms to report and reduce scams, verify reviews to promote reliability and authenticity and implement appropriate dispute resolution avenues for small businesses and consumers.
In the Regulatory Reform Report, the ACCC also called for targeted and mandatory industry codes to address anti-competitive conduct, unfair treatment of small business users and barriers to entry and expansion for digital platforms. In addition, the ACCC reiterated support for an expansion of the unfair contract term laws and a prohibition on unfair contract terms, which notably passed into law in November 2022. See our Unfair contract terms section of this report for further information. Digital platforms should prepare for closer attention from the ACCC on their terms and conditions and ensure standard form contracts comply with the UCT regime.
Key enforcement activity
Google LLC (No 4)  FCA 942
$60 million penalty for misleading statements concerning data privacy
In August 2022, the Federal Court ordered Google to pay $60 million in fines for breaching the Australian Consumer Law (ACL) by misleading an estimated 1.3 million Android users as to how their personal data was collected and used. Various screens presented to consumers when setting up and using their accounts represented that the ‘Location History’ setting controlled Google’s use of their location data and that when it was turned off Google would be unable to use, retain or obtain personal location data. Google failed to disclose that the ‘Web & App Activity’ setting had to be turned off if users didn’t want Google to use this data. The penalty ordered by the Court is the third highest penalty for a breach of the ACL and sends a strong message to businesses and digital platforms about how they engage with consumers.
Google LLC (No 2)  FCA 1476
Google triumphs over ACCC
To hear more about this, listen to our Watchdog season 3 podcast.
Telstra and other telecommunication providers
$33.5 million fines for internet speed misrepresentations
The ACCC brought proceedings against Telstra, Optus and TPG for misleading consumers about internet speeds, resulting in fines totalling $33.5 million handed down by the Federal Court. See our Consumer Protections section of this report for further information on these proceedings.
If 2022 is anything to go by, we can expect the ACCC to continue to undertake significant inquiries into, and take enforcement action against a wide range of participants in the telecommunications industry in 2023.
Competition and consumer issues relating to digital platforms will continue to be a key priority for the ACCC into 2023, with a further interim report due to be issued in March 2023 before the inquiry concludes with the final report in March 2025.
TPG and Telstra’s appeal of the ACCC’s decision to decline its proposed arrangement is also likely to be watched closely by mobile network operators and other market participants alike, given the possible long-term and enduring effects on markets for the retail and wholesale supply of mobile services, particularly in regional and rural Australia.
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