SlideShare uma empresa Scribd logo
1 de 43
Baixar para ler offline
FINANCIAL INSTITUTIONS
                                      ENERGY
                                      INFRASTRUCTURE, MINING AND COMMODITIES
                                      TRANSPORT
                                      TECHNOLOGY AND INNOVATION


Analysis of the National Access Regime:
                                      PHARMACEUTICALS AND LIFE SCIENCES




What can we expect in the future ?
Dr Martyn Taylor
Partner, Norton Rose
March 2013
Overview

    1. The National Access Regime


    2. Case study: Pilbara access dispute

                                            Dr Martyn Taylor
                                            Partner
    3. The Productivity Commission review   +61 2 9330 8056
                                            martyn.taylor@nortonrose.com


    4. What can we expect for the future?




2   17752725.ppt
1. The National Access Regime
What is the policy mischief ?                                  Essential facility   Affected market

                                                                   Airport              Aviation

                                                                   Port                 Shipping

                                                                   Gas pipeline         Gas supply

                                                                   Telecom network      Communications

                                                                   Railway line         Rail carriage



    • Access to certain infrastructure may be essential to competition (e.g., access to an
      airport is essential to compete as an airline).

    • The cost structure of the industry may prevent a competitor duplicating the facility (e.g.,
      a so-called ‘natural monopoly’)

    • The owner of that infrastructure therefore controls a unique “bottleneck” or an “essential
      facility” and can use that position of control to the owner’s commercial advantage:

             –      The owner may artificially reduce access and raise prices to increase profits.

             –      If the owner is competing in downstream markets, the owner may discriminate
                    against downstream competitors by giving them less favourable access.
4    17752725.ppt
How does competition law address this mischief ?

    • The Competition and Consumer Act 2010 (Cth) contains a generic prohibition against the
      misuse of market power in section 46:


         • a firm that has a substantial degree of market power

         • must not take advantage of that market power

         • for the purpose of harming competitors or deterring
           competitive conduct




    • In theory, a refusal to provide reasonable access to an
      essential facility may contravene section 46….

    …but, in practice, section 46 is notoriously difficult to apply.




5   17752725.ppt
The problems with relying on section 46 alone…

    1. Litigation is costly and may create a barrier to entry.

    2. Litigation does not normally enable access to be
       achieved quickly, even with injunctions.

    3. The outcome of litigation can be indeterminate,
       involving a significant risk.

    4. Market definition is inherently imprecise.

    5. The law in relation to ‘taking advantage’ is uncertain.
       The five most recent High Court cases have each
       been inconsistent in material respects.

    6. Establishing ‘purpose’ normally requires inferences to
       be drawn from circumstantial evidence.

    7. Decisions are usually confined to a particular factual
       pattern existing at a particular point in time in relation
       to particular players, products and actions.


6   17752725.ppt
Hilmer’s solution… the National Access Regime




                                                                                   Professor Fred Hilmer




Negotiation remains the preferred means to determine terms of access to infrastructure, but...

•     If the infrastructure can be economically duplicated, the owner has an incentive to provide
      reasonable access (or the access seeker will build its own facility), so negotiation should work.

•     If the infrastructure cannot be economically duplicated, then a ‘bottleneck’ exists and the
      absence of competition may lead the owner to impose unreasonable terms.

•     In the latter scenario, rather than relying on section 46, a regime should be created to allow
      access seekers to obtain access to essential national infrastructure on reasonable terms.


7   17752725.ppt
National Access Regime is contained in Part IIIA
    Part IIIA of the Competition and Consumer Act 2010 (Cth):

    • The regime is intended to enable ‘access seekers’ to obtain access to essential national
      infrastructure facilities on reasonable terms and prices.

    • First, the infrastructure is screened to determine whether regulation should be applied.

    • Second, if regulation is applied, an access seeker may request access to that
      infrastructure under a negotiate-arbitrate regime. (If reasonable terms of access cannot
      be negotiated, the ACCC may arbitrate those terms and issue binding determinations).




8    17752725.ppt
Stage 1 - Declaration

Screening process for determining whether
infrastructure should be regulated:

• Any person may apply to the National
  Competition Council (NCC) and request the
  ‘declaration’ of a service provided via a facility.

• The NCC will engage in a public consultation
  process to determine whether or not certain
  statutory criteria are met.

• If the statutory criteria are met, the NCC must
  recommend to the relevant Minister in favour
  of regulation via ‘declaration’.

• The NCC must prepare a report to the relevant
  Minister which sets out that recommendation.

• The Minister has limited discretion and must
  declare the service if the criteria are met.

• The Minister’s decision is subject to appeal,

9   17752725.ppt
Facility           Service          Declared?
 What can be declared ?                        Jet fuel line at   Airport fuel     No
                                               airport            supply
                                               Various            Rail carriage    Yes
                                               railway lines      services
  A service provided by means of a facility…
                                               Dam and            Water storage    No
                                               pipelines          and carriage
  What is a “facility”?                        Sewage             Sewage           Yes
                                               reticulation       carriage
  • Case law: “a physical asset (or set of     Runways at         Use if airport   Yes
    assets) essential for service provision”   airport            runways
                                               Electricity        Electricity      Withdrawn
                                               network            carriage

                                               Airport freight    Airport cargo    Yes
                                               aprons             services
                                               Gas network        Gas carriage     Withdrawn
                                                                  services
                                               Computer           Payroll          No
                                               system             service
                                               Cane tram          Carriage via     No
                                               network            tram
                                               Space at           Space for        No
                                               airport            cargo terminal
                                               Rail cargo         Rail             No
                                               facilities         marshalling



10 17752725.ppt
The five criteria for declaration

 NCC must consider whether:

 •   Access will promote competition
     in at least one other market

 •   Uneconomical to replicate the
     facility

 •   Facility is of national significance

 •   Access is not already subject to
     an effective access regime

 •   Access is not contrary to the
     public interest


 National Access Regime only applies
 in limited circumstances, including that
 the infrastructure must be nationally
 significant and access must promote
 competition
11 17752725.ppt
Example – access to a natural gas pipeline

  Upstream markets                      Downstream markets




      Gas exploration                    Gas supply



Exploration                                           Reticulation
tenements                                              network


                                       Non-gas markets
      Gas production                   supplied by users
                                            of gas


 Inputs into gas                              Inputs into gas
    production
  12 17752725.ppt
                                                  supply
Ministerial decision
• The National Competition Council makes a recommendation to
  the relevant Minister.

• The Minister must decide whether or not to declare the service.

• The High Court has held that the Minister has no residual
  discretion not to declare the service if the declaration criteria are
  met (i.e., the Minister must declare the service if the declaration
  criteria are met).




13 17752725.ppt
What has been declared to date ?

  Railway services:

  • Use of rail tracks and associated infrastructure on certain
    segments of the Tasmanian rail network.

  • Goldsworthy Railway track access service in Pilbara region.

  Airport services:

  • The use of runways, taxiways, parking aprons and other
    associated facilities (airside services) at Sydney Airport.

  • Use of freight aprons and hard stands to load and unload
    international aircraft at Sydney International Airport and
    Melbourne International Airport.

  Wastewater services:

  • Transportation of sewage and connection of new sewers in
    various locations in Sydney.

14 17752725.ppt
Voluntary access undertakings prevent declaration

• Access providers may voluntarily
  submit an “access undertaking” to the
  ACCC, before a service is declared.

• An access undertaking sets out the
  terms (including price) on which access
  will be provided (i.e., an offer to supply
  the service on pre-determined terms).

• If the undertaking is accepted by the
  ACCC, the service cannot be declared.



• Access undertakings do provide a means to obtain regulatory certainty.

• For example, NBN Co has submitted a 30 year access undertaking to provide investment
  certainty for its deployment of the $35 billion National Broadband Network (albeit under the
  analogous telecoms access regime in Part XIC of the Competition and Consumer Act).


15 17752725.ppt
Effective access regimes also prevent declaration
• State and Territory governments
  may create bespoke access
  regimes for infrastructure services
  provided in their regions.

• The relevant Government can then
  apply to National Competition
  Council (NCC) to have the regime
  certified as “effective”.

• The NCC recommends to the
  Federal Treasurer.

• If the access regime is certified as
   “effective” by the Treasurer, the
   services cannot be declared under
   the National Access Regime.
                                                                             Ports access
                                     Electricity networks                        (SA)
                                             (WA)             Water Access
  Dalrymple Bay                                                  (NSW)
                           Rail access                                       Queensland Rail
  Coal Terminal                                 Rail access
                               (SA)                                             Network
16 17752725.ppt                                     (WA)
Stage 2 - Arbitration

  • [     ]

  • [     ]




17 17752725.ppt
Stage 2 - Arbitration

  • [     ]

  • [     ]




18 17752725.ppt
Stage 2 - Arbitration

  • [     ]

  • [     ]




19 17752725.ppt
How does the ACCC arbitrate a dispute?

• ACCC expects parties to attempt
  to resolve the dispute before
  seeking arbitration.

• ACCC will seek to identify the
  fundamental issues in dispute (i.e.,
  not just price, may be particular
  issues in the pricing methodology).

• ACCC may sequence issues in the
  dispute to encourage commercial
  settlement (e.g., resolve pricing
  methodology, before price).

• ACCC may seek to facilitate
  commercial negotiation and
  settlement where practicable.

• Otherwise, the ACCC applies the
  statutory criteria…

20 17752725.ppt
What has been arbitrated by the ACCC to date?
  • Only one arbitration under Part IIIA has been conducted to conclusion.

           • Services Sydney sought access to Sydney Water’s sewage reticulation network.

           • 8 month arbitration process, preceded by some 8 years of negotiations for access.

           • Once pricing methodology was determined, parties commercially agreed prices.


  • The only other arbitration under Part IIIA was commercially settled.

           • Virgin Blue disputed the price of access to Sydney Airport,
             alleging a ‘per passenger’ pricing methodology was
             discriminatory vis a vis ‘maximum take off weight’.

           • Qantas joined the dispute as a party.

           • Sydney Airport settled the dispute by agreeing to continue
             with a ‘maximum take off weight’ pricing methodology.


  • But 182 arbitrations under the telecoms access regime in Part XIC !!
21 17752725.ppt
2. Case study: Rail access in the Pilbara
The protagonists…

 •     Fortescue Mining Group (FMG) has the largest holding of
       mining tenements in the Pilbara region, rich in iron ore.

 •     FMG wished to develop a substantial iron ore deposit,
       known as ‘Cloud Break’, via several open pit mines.

 •     The iron ore to be extracted had a value of some $20
       billion, assuming the iron ore could be transported to Port
       Hedland (or another port) for export to China.


 •     Rather than spending $2.5 billion constructing its own railway, FMG sought access
       to parts of the existing private railways of BHP Billiton (BHP) and Rio Tinto (Rio).

 •     Once it was clear that neither BHP nor Rio would provide access, FMG applied to
       the NCC for parts of four private railways in the Pilbara region to be declared:
         •   Hammersley & Robe, as used by Rio Tinto to connect to Port Dampier
         •   Goldsworthy & Mt Newman, as used by BHP to connect to Port Hedland


23 17752725.ppt
The importance of rail access to Fortescue

                                 PORT HEDLAND
  • [     ]
                  PORT DAMPIER
  • [     ]




                                                CLOUD
                                                BREAK
                                                 MINE




24 17752725.ppt
The resulting litigation….




25 17752725.ppt
Round 1… the initial jurisdictional skirmish

•    In Part IIIA, a ‘service’ is defined to exclude
     the use of a production process.

•    BHP claimed that its railways were part of a
     fully integrated ‘mine-to-port’ production
     process in the Pilbara.

•    BHP claimed that the NCC did not have
     jurisdiction to make a recommendation as the
     ‘service’ would involve the use of BHP’s
     production process.

•    The NCC determined it had jurisdiction, leading to a series of appeals through the courts
     to the High Court level.

•    The High Court held that FMG was seeking to use a facility that was used by BHP for its
     production process (i.e., the rail track). FMG was not seeking to use BHP’s production
     process itself (i.e., the rolling stock on that rail track).



26 17752725.ppt
Round 2… challenging the Minister’s declaration
  •    The NCC recommended to the Commonwealth Treasurer that the Goldsworthy,
       Hamersley, Robe and Mt Newman lines should all be declared.

  •    The Treasurer declared rail access to each of the Goldsworthy, Hamersley and Robe
       railway lines for 20 years. He did not make a decision for the Mt Newman line within the
       prescribed period, so that railway was deemed not declared.

  •    All three parties appealed the Minister’s decision to the Australian Competition Tribunal,
       which conducted a de novo hearing and replaced the Minister’s decision with its own:

         Railway              Minister’s decision   Appellant              Tribunal decision

         Goldsworthy          20 year declaration   BHP                    20 year declaration

         Hammersley           20 year declaration   Rio                    Not declared

         Robe                 20 year declaration   Rio                    10 year declaration

         Mt Newman            Deemed not declared   Fortescue              Not declared



27 17752725.ppt
Round 3… back to the Full Federal Court

  •    Fortescue and Rio both appealed to the Full Federal Court.


  Railway         Minister’s    Appellant   Tribunal       Appellant   FFC            Appellant
                  decision                  decision                   decision
  Goldsworthy     20 year       BHP         20 year
                  declaration               declaration
  Hammersley      20 year       Rio         Not declared   Fortescue   Not declared   Fortescue
                  declaration

  Robe            20 year       Rio         10 year        Rio         Not declared   Fortescue
                  declaration               declaration

  Mt Newman       Deemed not    Fortescue   Not declared
                  declared




  •    The Full Federal Court determined that the two Rio railways subject to appeal (i.e.,
       Hammersley and Robe) should not be declared.

  •    Fortescue then further appealed to the High Court…
28 17752725.ppt
Round 4… and back to the High Court
 •     The High Court surprised everyone by holding that the Tribunal had exceeded its
       statutory powers by conducting a de novo hearing. Accordingly, the High Court remitted
       the matter back to the Tribunal for a re-hearing…

 Other key conclusions:

 •     ‘Uneconomical to duplicate’ is construed to mean that ‘there is not anyone for whom it
       would be profitable to develop another facility’ (i.e., a ‘private profitability test’).

 •     The Tribunal should not lightly depart from the Minister’s conclusion as to whether
       access would be in the public interest.

 •     If the declaration criteria are satisfied, the Minister has no residual discretion and must
       declare the service.




29 17752725.ppt
The Tribunal’s reconsideration
 •    FMG and Rio’s applications were remitted
      to the Tribunal.                                 Railway               Final result

                                                       Goldsworthy (BHP)     20 year declaration
 •    The Tribunal re-decided these applications
      in December 2012 and published its               Hammersley (Rio)      Not declared
      decision in February 2013.
                                                       Robe (Rio)            Not declared
 •    The Tribunal indicated it had no power to
                                                       Mt Newman (BHP)       Not declared
      seek further information in order to apply
      the ‘private profitability’ test, given it was
      limited to the material before the Minister.

 •    Accordingly, the Tribunal determined that        Private profitability test:
      there was not sufficient material before it to
      establish that it would be uneconomical for      Applicant for declaration must establish
      anyone to develop an alternative facility to     that it is not privately profitable for
      provide the relevant services.                   anyone to develop an alternative facility
                                                       to provide the service.
 •    On these grounds, it set aside the
      Minister’s declarations in respect of the
      Robe and Hamersley lines on the basis that
      criterion (b) had not been satisfied.
30 17752725.ppt
A huge waste of time and money?
 •    It has taken some 9 years to resolve the declaration stage
      of access, including two High Court decisions.

 •    Fortescue ultimately decided to spend $2.5 billion and
      constructed its own private railway line.

 •    The Tribunal’s de novo re-hearing of the Minister’s decision
      was, in effect, disregarded, notwithstanding…

             •    The hearing occupied 42 sitting days.

             •    The parties filed 130 affidavits from 73 witnesses. Expert witnesses included
                  bankers, computer simulation experts, economists, engineers, environmental
                  scientists, geologists, metallurgists, quantity surveyors, rail modellers and train
                  schedulers, among others.

             •    This material took up approximately 70 large lever arch files.

             •    The transcript of the hearing runs for over 3300 pages.


31 17752725.ppt
Implications of the High Court’s decision

  1. Private profitability test – the decision raises the threshold
     for declaration. There must be no-one who can profitably
     duplicate the facility.

  2. Practical, commercial test – the courts prefer a more
     practical and commercial approach. An analysis of
     investment considerations will be important in future access
     matters.

  3. No residual discretion – the Minister is required to declare
     the service if the declaration criteria are met.

  4. The role of the Tribunal – when reviewing the Minister’s
     decision, the Tribunal is not permitted to receive additional
     evidence.

  5. Public interest – the Tribunal should be slow to depart from
     the Minister’s decision in relation to public interest factors.


32 17752725.ppt
3.   The Productivity Commission review
Terms of reference                                              David Bradbury, MP
                                                                 Assistant Treasurer

 1. Examine the rationale, role and objectives of the Regime,
    and Australia's overall framework of access regulation.

 2. Assess the performance of the Regime in meeting its
    rationale and objectives.
                                                                      Part of the motivation
 3. Report on whether the implementation of the Regime                for the review was the
    adequately ensures that its economic efficiency objectives        significant time and
    are met.                                                          expense involved in
                                                                      the application of the
 4. Provide advice on ways to improve processes and                   National Access
    decisions for facilitating third party access to essential        Regime, as
    infrastructure.                                                   evidenced by the
                                                                      Pilbara proceedings.
 5. Review the effectiveness of the reforms outlined in CIRA,
    and the actions and reforms undertaken by governments in
    giving effect to CIRA.

 6. Comment on other relevant policy measures which would
    help ensure effective and responsive delivery of
    infrastructure services.

34 17752725.ppt
Key issues under consideration                                          Patricia Scott
                                                                         Commissioner


  • Do we still need a National Access Regime and, if so, what should be its
    future role ?

  • Is the scope of the Regime commensurate with the policy mischief ?

  • Should the declaration criteria be amended or refined ?

  • Should the private profitability test remain, or should it be replaced by a
    net social benefit or a natural monopoly test ?

  • How can the certification process for State-based access regimes be
    improved ?

  • How should the arbitration regime be improved to enable the timely
    resolution of disputes ?

  • How should the National Access Regime be amended or refined to assist
    its effective application ?

  • Are the current institutions, such as the NCC and Tribunal, appropriate ?


35 17752725.ppt
Submissions to date (36)
   ACCC’s view:                                            NCC’s view:

   • Retain Part IIIA. The High Court’s guidance           • Retain Part IIIA. Net social benefit test,
     on the Tribunal’s role corrects many issues.            not private profitability.

   • Net social benefit test, not private profitability.   • Tribunal’s role is superfluous.


   Law Council’s view:                                     Treasury’s view

   • Retain Part IIIA. Clarify the declaration             • Retail Part IIIA. Net social benefit test,
     criteria. The public interest test should be            not private profitability
     more objective and less political.

   • The High Court’s guidance assists, but there
     are too many institutional decision-makers.


   Business Council’s view:

   • Retain Part IIIA, but reduce the investment
     risks and high transaction costs.


36 17752725.ppt
Timeframe for recommendations to Government

    Time frame      Deliverable


    October 2012    Terms of Reference released by
                    Government

    November 2012   Issues Paper released by Productivity
                    Commission

    February 2013   Public submissions due to Productivity
                    Commission

    May 2013        Draft report released by Productivity
                    Commission

    July 2013       Public hearings before Productivity
                    Commission

    October 2013    Report to Government by Productivity
                    Commission


37 17752725.ppt
Most likely outcomes and recommendations
  • Part IIIA will be retained. It serves an important role.

  • The Part IIIA process may be streamlined, possibly by
    consolidating institutions – such as the NCC and Tribunal.

  • The private profitability test may be replaced by a net social benefit
    test or similar.

  • The objectives of the National Access Regime may be tweaked.

  • The public benefit test may contain more objective criteria.

  • Refinements may be made to the arbitration regime to reflect the
    experience from telecoms access disputes.




38 17752725.ppt
4.   What can we expect in the future?
What is likely to occur within 5 years ?

  • Likely to see further development of State-based access regimes,
    particularly in relation to critical infrastructure such as ports and rail.

  • National Access Regime may be applied more frequently, once it has
    been refined and streamlined. However, this will only occur if the private
    profitability test is replaced with a net social benefit test.

  • Extensive litigation in the nature of the Pilbara proceedings is unlikely to
    be repeated. However, Part IIIA issues are likely to continue to be litigated
    given the significant sums of money at stake.

  • Key infrastructure to watch:

                        airports                water supply
                        ports                   sewage
                        railways                electronic systems


40 17752725.ppt
Hilmer revisited – national competition policy

    Interesting thought: August 2013 will be the 20th anniversary of the Hilmer
    Report. Perhaps we should have another Inquiry into National Competition Policy
    in Australia, essentially to update the Hilmer recommendations ?


  • Refining the competition policy settings for Australia in the 21st
    century and continuing the current momentum.

  • Progressing the competition reform agenda of the Council of
    Australian Governments (COAG).

  • Building on current Government policy initiatives towards less
    regulation and more effective ‘best practice’ regulation.

  • Harmonising state-based sectoral access regimes.

  • Identifying specific sectors deserving of access regimes.

  • Undertaking a general stock take on competition law – and
    perhaps pruning some anachronistic aspects.


41 17752725.ppt
Questions?




42 17752725.ppt
Our international practice




    Disclaimer
    The purpose of this presentation is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Norton Rose Australia on the points of
    law discussed. No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any constituent part of Norton Rose Group (whether or not such individual is described as a
    “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation. Any reference to a partner or director is to a member, employee or consultant with equivalent
    standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton Rose Canada LLP or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their
    respective affiliates.


43 17752725.ppt

Mais conteúdo relacionado

Semelhante a Analysis of the Australian National Access Regime

Desarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en PortugalDesarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en PortugalJorge Bossio
 
Desarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en PortugalDesarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en Portugalguestb2c12
 
Progress Of Interoperability
Progress Of InteroperabilityProgress Of Interoperability
Progress Of Interoperabilityrobtepas
 
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization Exploring New Regulatory Worlds in Era of Digitalization & Decentralization
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization European University Institute
 
e-Court in CERC Transforming the Judicial Process….
e-Court in CERC Transforming the Judicial Process….e-Court in CERC Transforming the Judicial Process….
e-Court in CERC Transforming the Judicial Process….eGov Magazine
 
Srldc 28 May2013_congestionEnergy & Power Meet
Srldc 28 May2013_congestionEnergy & Power MeetSrldc 28 May2013_congestionEnergy & Power Meet
Srldc 28 May2013_congestionEnergy & Power MeetPRIYANK JAIN
 
Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976LLC NewLink
 
Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976Newlink
 
Elevator pitches from Digital Railways competition consortia building day
Elevator pitches from Digital Railways competition consortia building dayElevator pitches from Digital Railways competition consortia building day
Elevator pitches from Digital Railways competition consortia building dayKTN
 
Liabilities and automation in aviation
Liabilities and automation in aviationLiabilities and automation in aviation
Liabilities and automation in aviationALIAS Network
 
Examining Regulatory Environment in the Ethernet world
Examining Regulatory Environment in the Ethernet worldExamining Regulatory Environment in the Ethernet world
Examining Regulatory Environment in the Ethernet worldArief Gunawan
 
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...Perspectives of Implementing Automated and Robotics-based Techniques in Road ...
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...Basil Psarianos
 
Tsc cav@digital catapult_march2019
Tsc cav@digital catapult_march2019Tsc cav@digital catapult_march2019
Tsc cav@digital catapult_march2019Peter Bloomfield
 
ISCF Future Flight Networking Event - Use cases
ISCF Future Flight Networking Event - Use casesISCF Future Flight Networking Event - Use cases
ISCF Future Flight Networking Event - Use casesKTN
 
Blervaque_Ertico
Blervaque_ErticoBlervaque_Ertico
Blervaque_ErticoGoWireless
 
The Transport Layer
The Transport LayerThe Transport Layer
The Transport Layeradil raja
 
Plg2009 Windpower
Plg2009 WindpowerPlg2009 Windpower
Plg2009 WindpowerBillShoaf
 

Semelhante a Analysis of the Australian National Access Regime (20)

Desarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en PortugalDesarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en Portugal
 
Desarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en PortugalDesarrollo de Servicios NGN en Portugal
Desarrollo de Servicios NGN en Portugal
 
Progress Of Interoperability
Progress Of InteroperabilityProgress Of Interoperability
Progress Of Interoperability
 
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization Exploring New Regulatory Worlds in Era of Digitalization & Decentralization
Exploring New Regulatory Worlds in Era of Digitalization & Decentralization
 
e-Court in CERC Transforming the Judicial Process….
e-Court in CERC Transforming the Judicial Process….e-Court in CERC Transforming the Judicial Process….
e-Court in CERC Transforming the Judicial Process….
 
Monopoly
MonopolyMonopoly
Monopoly
 
Srldc 28 May2013_congestionEnergy & Power Meet
Srldc 28 May2013_congestionEnergy & Power MeetSrldc 28 May2013_congestionEnergy & Power Meet
Srldc 28 May2013_congestionEnergy & Power Meet
 
Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976
 
Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976Carrier ethernet-services-the-future-public-multivendor1976
Carrier ethernet-services-the-future-public-multivendor1976
 
Elevator pitches from Digital Railways competition consortia building day
Elevator pitches from Digital Railways competition consortia building dayElevator pitches from Digital Railways competition consortia building day
Elevator pitches from Digital Railways competition consortia building day
 
Liabilities and automation in aviation
Liabilities and automation in aviationLiabilities and automation in aviation
Liabilities and automation in aviation
 
Examining Regulatory Environment in the Ethernet world
Examining Regulatory Environment in the Ethernet worldExamining Regulatory Environment in the Ethernet world
Examining Regulatory Environment in the Ethernet world
 
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...Perspectives of Implementing Automated and Robotics-based Techniques in Road ...
Perspectives of Implementing Automated and Robotics-based Techniques in Road ...
 
Tsc cav@digital catapult_march2019
Tsc cav@digital catapult_march2019Tsc cav@digital catapult_march2019
Tsc cav@digital catapult_march2019
 
ISCF Future Flight Networking Event - Use cases
ISCF Future Flight Networking Event - Use casesISCF Future Flight Networking Event - Use cases
ISCF Future Flight Networking Event - Use cases
 
2016 ACC Competition
2016 ACC Competition2016 ACC Competition
2016 ACC Competition
 
Blervaque_Ertico
Blervaque_ErticoBlervaque_Ertico
Blervaque_Ertico
 
The Transport Layer
The Transport LayerThe Transport Layer
The Transport Layer
 
Rm15 14 lppc comments 4-19-16(1)
Rm15 14 lppc comments 4-19-16(1)Rm15 14 lppc comments 4-19-16(1)
Rm15 14 lppc comments 4-19-16(1)
 
Plg2009 Windpower
Plg2009 WindpowerPlg2009 Windpower
Plg2009 Windpower
 

Mais de Martyn Taylor

Developments in the TMT Sector - Current trends & emerging legal issues
Developments in the TMT Sector - Current trends & emerging legal issuesDevelopments in the TMT Sector - Current trends & emerging legal issues
Developments in the TMT Sector - Current trends & emerging legal issuesMartyn Taylor
 
Telecoms in a convergent world - Emerging issues
Telecoms in a convergent world - Emerging issuesTelecoms in a convergent world - Emerging issues
Telecoms in a convergent world - Emerging issuesMartyn Taylor
 
Fuel industry competition in Australia
Fuel industry competition in AustraliaFuel industry competition in Australia
Fuel industry competition in AustraliaMartyn Taylor
 
MVNOs and mobile resellers - Commercial and regulatory issues
MVNOs and mobile resellers - Commercial and regulatory issuesMVNOs and mobile resellers - Commercial and regulatory issues
MVNOs and mobile resellers - Commercial and regulatory issuesMartyn Taylor
 
Status of Australian Privatisations - October 2016
Status of Australian Privatisations - October 2016Status of Australian Privatisations - October 2016
Status of Australian Privatisations - October 2016Martyn Taylor
 
Merger review - International insights - April 2016
Merger review - International insights - April 2016Merger review - International insights - April 2016
Merger review - International insights - April 2016Martyn Taylor
 
Competition and Consumer Law Update: Every cloud has a silver lining...
Competition and Consumer Law Update: Every cloud has a silver lining...Competition and Consumer Law Update: Every cloud has a silver lining...
Competition and Consumer Law Update: Every cloud has a silver lining...Martyn Taylor
 
Competition Law in High Technology Industries - Insights for Australia (Slides)
Competition Law in High Technology Industries - Insights for Australia (Slides)Competition Law in High Technology Industries - Insights for Australia (Slides)
Competition Law in High Technology Industries - Insights for Australia (Slides)Martyn Taylor
 
Competition Law in High Technology Industries - Insights for Australia
Competition Law in High Technology Industries - Insights for AustraliaCompetition Law in High Technology Industries - Insights for Australia
Competition Law in High Technology Industries - Insights for AustraliaMartyn Taylor
 
Infrastructure regulation - exploring the key models (Australia)
Infrastructure regulation - exploring the key models (Australia)Infrastructure regulation - exploring the key models (Australia)
Infrastructure regulation - exploring the key models (Australia)Martyn Taylor
 
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...Martyn Taylor
 
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...Martyn Taylor
 
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015Martyn Taylor
 
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...Martyn Taylor
 
M&A law in the Asia-Pacific
M&A law in the Asia-PacificM&A law in the Asia-Pacific
M&A law in the Asia-PacificMartyn Taylor
 
Privatisation of Port of Melbourne, Australia
Privatisation of Port of Melbourne, AustraliaPrivatisation of Port of Melbourne, Australia
Privatisation of Port of Melbourne, AustraliaMartyn Taylor
 
Australian telecoms licensing - An overview
Australian telecoms licensing - An overviewAustralian telecoms licensing - An overview
Australian telecoms licensing - An overviewMartyn Taylor
 
Predatory buying to corner a market: ACCC v Cement Australia
Predatory buying to corner a market: ACCC v Cement AustraliaPredatory buying to corner a market: ACCC v Cement Australia
Predatory buying to corner a market: ACCC v Cement AustraliaMartyn Taylor
 
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014Martyn Taylor
 
Telecoms spectrum licensing - regulation of radiofrequency spectrum
Telecoms spectrum licensing - regulation of radiofrequency spectrumTelecoms spectrum licensing - regulation of radiofrequency spectrum
Telecoms spectrum licensing - regulation of radiofrequency spectrumMartyn Taylor
 

Mais de Martyn Taylor (20)

Developments in the TMT Sector - Current trends & emerging legal issues
Developments in the TMT Sector - Current trends & emerging legal issuesDevelopments in the TMT Sector - Current trends & emerging legal issues
Developments in the TMT Sector - Current trends & emerging legal issues
 
Telecoms in a convergent world - Emerging issues
Telecoms in a convergent world - Emerging issuesTelecoms in a convergent world - Emerging issues
Telecoms in a convergent world - Emerging issues
 
Fuel industry competition in Australia
Fuel industry competition in AustraliaFuel industry competition in Australia
Fuel industry competition in Australia
 
MVNOs and mobile resellers - Commercial and regulatory issues
MVNOs and mobile resellers - Commercial and regulatory issuesMVNOs and mobile resellers - Commercial and regulatory issues
MVNOs and mobile resellers - Commercial and regulatory issues
 
Status of Australian Privatisations - October 2016
Status of Australian Privatisations - October 2016Status of Australian Privatisations - October 2016
Status of Australian Privatisations - October 2016
 
Merger review - International insights - April 2016
Merger review - International insights - April 2016Merger review - International insights - April 2016
Merger review - International insights - April 2016
 
Competition and Consumer Law Update: Every cloud has a silver lining...
Competition and Consumer Law Update: Every cloud has a silver lining...Competition and Consumer Law Update: Every cloud has a silver lining...
Competition and Consumer Law Update: Every cloud has a silver lining...
 
Competition Law in High Technology Industries - Insights for Australia (Slides)
Competition Law in High Technology Industries - Insights for Australia (Slides)Competition Law in High Technology Industries - Insights for Australia (Slides)
Competition Law in High Technology Industries - Insights for Australia (Slides)
 
Competition Law in High Technology Industries - Insights for Australia
Competition Law in High Technology Industries - Insights for AustraliaCompetition Law in High Technology Industries - Insights for Australia
Competition Law in High Technology Industries - Insights for Australia
 
Infrastructure regulation - exploring the key models (Australia)
Infrastructure regulation - exploring the key models (Australia)Infrastructure regulation - exploring the key models (Australia)
Infrastructure regulation - exploring the key models (Australia)
 
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - M...
 
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...
EXPERTS’ REPORT ON NATIONAL ICT POLICY PHASE 2 REFORMS - PAPUA NEW GUINEA - F...
 
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015
MVNOs & M2M (Machine to Machine) - Mobile telecommunications in 2015
 
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...
NSW Electricity Privatisation - Privatisation of Electricity Networks, NSW, A...
 
M&A law in the Asia-Pacific
M&A law in the Asia-PacificM&A law in the Asia-Pacific
M&A law in the Asia-Pacific
 
Privatisation of Port of Melbourne, Australia
Privatisation of Port of Melbourne, AustraliaPrivatisation of Port of Melbourne, Australia
Privatisation of Port of Melbourne, Australia
 
Australian telecoms licensing - An overview
Australian telecoms licensing - An overviewAustralian telecoms licensing - An overview
Australian telecoms licensing - An overview
 
Predatory buying to corner a market: ACCC v Cement Australia
Predatory buying to corner a market: ACCC v Cement AustraliaPredatory buying to corner a market: ACCC v Cement Australia
Predatory buying to corner a market: ACCC v Cement Australia
 
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014
M2M (Machine to Machine) & MVNOs - Mobile telecommunications in 2014
 
Telecoms spectrum licensing - regulation of radiofrequency spectrum
Telecoms spectrum licensing - regulation of radiofrequency spectrumTelecoms spectrum licensing - regulation of radiofrequency spectrum
Telecoms spectrum licensing - regulation of radiofrequency spectrum
 

Analysis of the Australian National Access Regime

  • 1. FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION Analysis of the National Access Regime: PHARMACEUTICALS AND LIFE SCIENCES What can we expect in the future ? Dr Martyn Taylor Partner, Norton Rose March 2013
  • 2. Overview 1. The National Access Regime 2. Case study: Pilbara access dispute Dr Martyn Taylor Partner 3. The Productivity Commission review +61 2 9330 8056 martyn.taylor@nortonrose.com 4. What can we expect for the future? 2 17752725.ppt
  • 3. 1. The National Access Regime
  • 4. What is the policy mischief ? Essential facility Affected market Airport Aviation Port Shipping Gas pipeline Gas supply Telecom network Communications Railway line Rail carriage • Access to certain infrastructure may be essential to competition (e.g., access to an airport is essential to compete as an airline). • The cost structure of the industry may prevent a competitor duplicating the facility (e.g., a so-called ‘natural monopoly’) • The owner of that infrastructure therefore controls a unique “bottleneck” or an “essential facility” and can use that position of control to the owner’s commercial advantage: – The owner may artificially reduce access and raise prices to increase profits. – If the owner is competing in downstream markets, the owner may discriminate against downstream competitors by giving them less favourable access. 4 17752725.ppt
  • 5. How does competition law address this mischief ? • The Competition and Consumer Act 2010 (Cth) contains a generic prohibition against the misuse of market power in section 46: • a firm that has a substantial degree of market power • must not take advantage of that market power • for the purpose of harming competitors or deterring competitive conduct • In theory, a refusal to provide reasonable access to an essential facility may contravene section 46…. …but, in practice, section 46 is notoriously difficult to apply. 5 17752725.ppt
  • 6. The problems with relying on section 46 alone… 1. Litigation is costly and may create a barrier to entry. 2. Litigation does not normally enable access to be achieved quickly, even with injunctions. 3. The outcome of litigation can be indeterminate, involving a significant risk. 4. Market definition is inherently imprecise. 5. The law in relation to ‘taking advantage’ is uncertain. The five most recent High Court cases have each been inconsistent in material respects. 6. Establishing ‘purpose’ normally requires inferences to be drawn from circumstantial evidence. 7. Decisions are usually confined to a particular factual pattern existing at a particular point in time in relation to particular players, products and actions. 6 17752725.ppt
  • 7. Hilmer’s solution… the National Access Regime Professor Fred Hilmer Negotiation remains the preferred means to determine terms of access to infrastructure, but... • If the infrastructure can be economically duplicated, the owner has an incentive to provide reasonable access (or the access seeker will build its own facility), so negotiation should work. • If the infrastructure cannot be economically duplicated, then a ‘bottleneck’ exists and the absence of competition may lead the owner to impose unreasonable terms. • In the latter scenario, rather than relying on section 46, a regime should be created to allow access seekers to obtain access to essential national infrastructure on reasonable terms. 7 17752725.ppt
  • 8. National Access Regime is contained in Part IIIA Part IIIA of the Competition and Consumer Act 2010 (Cth): • The regime is intended to enable ‘access seekers’ to obtain access to essential national infrastructure facilities on reasonable terms and prices. • First, the infrastructure is screened to determine whether regulation should be applied. • Second, if regulation is applied, an access seeker may request access to that infrastructure under a negotiate-arbitrate regime. (If reasonable terms of access cannot be negotiated, the ACCC may arbitrate those terms and issue binding determinations). 8 17752725.ppt
  • 9. Stage 1 - Declaration Screening process for determining whether infrastructure should be regulated: • Any person may apply to the National Competition Council (NCC) and request the ‘declaration’ of a service provided via a facility. • The NCC will engage in a public consultation process to determine whether or not certain statutory criteria are met. • If the statutory criteria are met, the NCC must recommend to the relevant Minister in favour of regulation via ‘declaration’. • The NCC must prepare a report to the relevant Minister which sets out that recommendation. • The Minister has limited discretion and must declare the service if the criteria are met. • The Minister’s decision is subject to appeal, 9 17752725.ppt
  • 10. Facility Service Declared? What can be declared ? Jet fuel line at Airport fuel No airport supply Various Rail carriage Yes railway lines services A service provided by means of a facility… Dam and Water storage No pipelines and carriage What is a “facility”? Sewage Sewage Yes reticulation carriage • Case law: “a physical asset (or set of Runways at Use if airport Yes assets) essential for service provision” airport runways Electricity Electricity Withdrawn network carriage Airport freight Airport cargo Yes aprons services Gas network Gas carriage Withdrawn services Computer Payroll No system service Cane tram Carriage via No network tram Space at Space for No airport cargo terminal Rail cargo Rail No facilities marshalling 10 17752725.ppt
  • 11. The five criteria for declaration NCC must consider whether: • Access will promote competition in at least one other market • Uneconomical to replicate the facility • Facility is of national significance • Access is not already subject to an effective access regime • Access is not contrary to the public interest National Access Regime only applies in limited circumstances, including that the infrastructure must be nationally significant and access must promote competition 11 17752725.ppt
  • 12. Example – access to a natural gas pipeline Upstream markets Downstream markets Gas exploration Gas supply Exploration Reticulation tenements network Non-gas markets Gas production supplied by users of gas Inputs into gas Inputs into gas production 12 17752725.ppt supply
  • 13. Ministerial decision • The National Competition Council makes a recommendation to the relevant Minister. • The Minister must decide whether or not to declare the service. • The High Court has held that the Minister has no residual discretion not to declare the service if the declaration criteria are met (i.e., the Minister must declare the service if the declaration criteria are met). 13 17752725.ppt
  • 14. What has been declared to date ? Railway services: • Use of rail tracks and associated infrastructure on certain segments of the Tasmanian rail network. • Goldsworthy Railway track access service in Pilbara region. Airport services: • The use of runways, taxiways, parking aprons and other associated facilities (airside services) at Sydney Airport. • Use of freight aprons and hard stands to load and unload international aircraft at Sydney International Airport and Melbourne International Airport. Wastewater services: • Transportation of sewage and connection of new sewers in various locations in Sydney. 14 17752725.ppt
  • 15. Voluntary access undertakings prevent declaration • Access providers may voluntarily submit an “access undertaking” to the ACCC, before a service is declared. • An access undertaking sets out the terms (including price) on which access will be provided (i.e., an offer to supply the service on pre-determined terms). • If the undertaking is accepted by the ACCC, the service cannot be declared. • Access undertakings do provide a means to obtain regulatory certainty. • For example, NBN Co has submitted a 30 year access undertaking to provide investment certainty for its deployment of the $35 billion National Broadband Network (albeit under the analogous telecoms access regime in Part XIC of the Competition and Consumer Act). 15 17752725.ppt
  • 16. Effective access regimes also prevent declaration • State and Territory governments may create bespoke access regimes for infrastructure services provided in their regions. • The relevant Government can then apply to National Competition Council (NCC) to have the regime certified as “effective”. • The NCC recommends to the Federal Treasurer. • If the access regime is certified as “effective” by the Treasurer, the services cannot be declared under the National Access Regime. Ports access Electricity networks (SA) (WA) Water Access Dalrymple Bay (NSW) Rail access Queensland Rail Coal Terminal Rail access (SA) Network 16 17752725.ppt (WA)
  • 17. Stage 2 - Arbitration • [ ] • [ ] 17 17752725.ppt
  • 18. Stage 2 - Arbitration • [ ] • [ ] 18 17752725.ppt
  • 19. Stage 2 - Arbitration • [ ] • [ ] 19 17752725.ppt
  • 20. How does the ACCC arbitrate a dispute? • ACCC expects parties to attempt to resolve the dispute before seeking arbitration. • ACCC will seek to identify the fundamental issues in dispute (i.e., not just price, may be particular issues in the pricing methodology). • ACCC may sequence issues in the dispute to encourage commercial settlement (e.g., resolve pricing methodology, before price). • ACCC may seek to facilitate commercial negotiation and settlement where practicable. • Otherwise, the ACCC applies the statutory criteria… 20 17752725.ppt
  • 21. What has been arbitrated by the ACCC to date? • Only one arbitration under Part IIIA has been conducted to conclusion. • Services Sydney sought access to Sydney Water’s sewage reticulation network. • 8 month arbitration process, preceded by some 8 years of negotiations for access. • Once pricing methodology was determined, parties commercially agreed prices. • The only other arbitration under Part IIIA was commercially settled. • Virgin Blue disputed the price of access to Sydney Airport, alleging a ‘per passenger’ pricing methodology was discriminatory vis a vis ‘maximum take off weight’. • Qantas joined the dispute as a party. • Sydney Airport settled the dispute by agreeing to continue with a ‘maximum take off weight’ pricing methodology. • But 182 arbitrations under the telecoms access regime in Part XIC !! 21 17752725.ppt
  • 22. 2. Case study: Rail access in the Pilbara
  • 23. The protagonists… • Fortescue Mining Group (FMG) has the largest holding of mining tenements in the Pilbara region, rich in iron ore. • FMG wished to develop a substantial iron ore deposit, known as ‘Cloud Break’, via several open pit mines. • The iron ore to be extracted had a value of some $20 billion, assuming the iron ore could be transported to Port Hedland (or another port) for export to China. • Rather than spending $2.5 billion constructing its own railway, FMG sought access to parts of the existing private railways of BHP Billiton (BHP) and Rio Tinto (Rio). • Once it was clear that neither BHP nor Rio would provide access, FMG applied to the NCC for parts of four private railways in the Pilbara region to be declared: • Hammersley & Robe, as used by Rio Tinto to connect to Port Dampier • Goldsworthy & Mt Newman, as used by BHP to connect to Port Hedland 23 17752725.ppt
  • 24. The importance of rail access to Fortescue PORT HEDLAND • [ ] PORT DAMPIER • [ ] CLOUD BREAK MINE 24 17752725.ppt
  • 26. Round 1… the initial jurisdictional skirmish • In Part IIIA, a ‘service’ is defined to exclude the use of a production process. • BHP claimed that its railways were part of a fully integrated ‘mine-to-port’ production process in the Pilbara. • BHP claimed that the NCC did not have jurisdiction to make a recommendation as the ‘service’ would involve the use of BHP’s production process. • The NCC determined it had jurisdiction, leading to a series of appeals through the courts to the High Court level. • The High Court held that FMG was seeking to use a facility that was used by BHP for its production process (i.e., the rail track). FMG was not seeking to use BHP’s production process itself (i.e., the rolling stock on that rail track). 26 17752725.ppt
  • 27. Round 2… challenging the Minister’s declaration • The NCC recommended to the Commonwealth Treasurer that the Goldsworthy, Hamersley, Robe and Mt Newman lines should all be declared. • The Treasurer declared rail access to each of the Goldsworthy, Hamersley and Robe railway lines for 20 years. He did not make a decision for the Mt Newman line within the prescribed period, so that railway was deemed not declared. • All three parties appealed the Minister’s decision to the Australian Competition Tribunal, which conducted a de novo hearing and replaced the Minister’s decision with its own: Railway Minister’s decision Appellant Tribunal decision Goldsworthy 20 year declaration BHP 20 year declaration Hammersley 20 year declaration Rio Not declared Robe 20 year declaration Rio 10 year declaration Mt Newman Deemed not declared Fortescue Not declared 27 17752725.ppt
  • 28. Round 3… back to the Full Federal Court • Fortescue and Rio both appealed to the Full Federal Court. Railway Minister’s Appellant Tribunal Appellant FFC Appellant decision decision decision Goldsworthy 20 year BHP 20 year declaration declaration Hammersley 20 year Rio Not declared Fortescue Not declared Fortescue declaration Robe 20 year Rio 10 year Rio Not declared Fortescue declaration declaration Mt Newman Deemed not Fortescue Not declared declared • The Full Federal Court determined that the two Rio railways subject to appeal (i.e., Hammersley and Robe) should not be declared. • Fortescue then further appealed to the High Court… 28 17752725.ppt
  • 29. Round 4… and back to the High Court • The High Court surprised everyone by holding that the Tribunal had exceeded its statutory powers by conducting a de novo hearing. Accordingly, the High Court remitted the matter back to the Tribunal for a re-hearing… Other key conclusions: • ‘Uneconomical to duplicate’ is construed to mean that ‘there is not anyone for whom it would be profitable to develop another facility’ (i.e., a ‘private profitability test’). • The Tribunal should not lightly depart from the Minister’s conclusion as to whether access would be in the public interest. • If the declaration criteria are satisfied, the Minister has no residual discretion and must declare the service. 29 17752725.ppt
  • 30. The Tribunal’s reconsideration • FMG and Rio’s applications were remitted to the Tribunal. Railway Final result Goldsworthy (BHP) 20 year declaration • The Tribunal re-decided these applications in December 2012 and published its Hammersley (Rio) Not declared decision in February 2013. Robe (Rio) Not declared • The Tribunal indicated it had no power to Mt Newman (BHP) Not declared seek further information in order to apply the ‘private profitability’ test, given it was limited to the material before the Minister. • Accordingly, the Tribunal determined that Private profitability test: there was not sufficient material before it to establish that it would be uneconomical for Applicant for declaration must establish anyone to develop an alternative facility to that it is not privately profitable for provide the relevant services. anyone to develop an alternative facility to provide the service. • On these grounds, it set aside the Minister’s declarations in respect of the Robe and Hamersley lines on the basis that criterion (b) had not been satisfied. 30 17752725.ppt
  • 31. A huge waste of time and money? • It has taken some 9 years to resolve the declaration stage of access, including two High Court decisions. • Fortescue ultimately decided to spend $2.5 billion and constructed its own private railway line. • The Tribunal’s de novo re-hearing of the Minister’s decision was, in effect, disregarded, notwithstanding… • The hearing occupied 42 sitting days. • The parties filed 130 affidavits from 73 witnesses. Expert witnesses included bankers, computer simulation experts, economists, engineers, environmental scientists, geologists, metallurgists, quantity surveyors, rail modellers and train schedulers, among others. • This material took up approximately 70 large lever arch files. • The transcript of the hearing runs for over 3300 pages. 31 17752725.ppt
  • 32. Implications of the High Court’s decision 1. Private profitability test – the decision raises the threshold for declaration. There must be no-one who can profitably duplicate the facility. 2. Practical, commercial test – the courts prefer a more practical and commercial approach. An analysis of investment considerations will be important in future access matters. 3. No residual discretion – the Minister is required to declare the service if the declaration criteria are met. 4. The role of the Tribunal – when reviewing the Minister’s decision, the Tribunal is not permitted to receive additional evidence. 5. Public interest – the Tribunal should be slow to depart from the Minister’s decision in relation to public interest factors. 32 17752725.ppt
  • 33. 3. The Productivity Commission review
  • 34. Terms of reference David Bradbury, MP Assistant Treasurer 1. Examine the rationale, role and objectives of the Regime, and Australia's overall framework of access regulation. 2. Assess the performance of the Regime in meeting its rationale and objectives. Part of the motivation 3. Report on whether the implementation of the Regime for the review was the adequately ensures that its economic efficiency objectives significant time and are met. expense involved in the application of the 4. Provide advice on ways to improve processes and National Access decisions for facilitating third party access to essential Regime, as infrastructure. evidenced by the Pilbara proceedings. 5. Review the effectiveness of the reforms outlined in CIRA, and the actions and reforms undertaken by governments in giving effect to CIRA. 6. Comment on other relevant policy measures which would help ensure effective and responsive delivery of infrastructure services. 34 17752725.ppt
  • 35. Key issues under consideration Patricia Scott Commissioner • Do we still need a National Access Regime and, if so, what should be its future role ? • Is the scope of the Regime commensurate with the policy mischief ? • Should the declaration criteria be amended or refined ? • Should the private profitability test remain, or should it be replaced by a net social benefit or a natural monopoly test ? • How can the certification process for State-based access regimes be improved ? • How should the arbitration regime be improved to enable the timely resolution of disputes ? • How should the National Access Regime be amended or refined to assist its effective application ? • Are the current institutions, such as the NCC and Tribunal, appropriate ? 35 17752725.ppt
  • 36. Submissions to date (36) ACCC’s view: NCC’s view: • Retain Part IIIA. The High Court’s guidance • Retain Part IIIA. Net social benefit test, on the Tribunal’s role corrects many issues. not private profitability. • Net social benefit test, not private profitability. • Tribunal’s role is superfluous. Law Council’s view: Treasury’s view • Retain Part IIIA. Clarify the declaration • Retail Part IIIA. Net social benefit test, criteria. The public interest test should be not private profitability more objective and less political. • The High Court’s guidance assists, but there are too many institutional decision-makers. Business Council’s view: • Retain Part IIIA, but reduce the investment risks and high transaction costs. 36 17752725.ppt
  • 37. Timeframe for recommendations to Government Time frame Deliverable October 2012 Terms of Reference released by Government November 2012 Issues Paper released by Productivity Commission February 2013 Public submissions due to Productivity Commission May 2013 Draft report released by Productivity Commission July 2013 Public hearings before Productivity Commission October 2013 Report to Government by Productivity Commission 37 17752725.ppt
  • 38. Most likely outcomes and recommendations • Part IIIA will be retained. It serves an important role. • The Part IIIA process may be streamlined, possibly by consolidating institutions – such as the NCC and Tribunal. • The private profitability test may be replaced by a net social benefit test or similar. • The objectives of the National Access Regime may be tweaked. • The public benefit test may contain more objective criteria. • Refinements may be made to the arbitration regime to reflect the experience from telecoms access disputes. 38 17752725.ppt
  • 39. 4. What can we expect in the future?
  • 40. What is likely to occur within 5 years ? • Likely to see further development of State-based access regimes, particularly in relation to critical infrastructure such as ports and rail. • National Access Regime may be applied more frequently, once it has been refined and streamlined. However, this will only occur if the private profitability test is replaced with a net social benefit test. • Extensive litigation in the nature of the Pilbara proceedings is unlikely to be repeated. However, Part IIIA issues are likely to continue to be litigated given the significant sums of money at stake. • Key infrastructure to watch: airports water supply ports sewage railways electronic systems 40 17752725.ppt
  • 41. Hilmer revisited – national competition policy Interesting thought: August 2013 will be the 20th anniversary of the Hilmer Report. Perhaps we should have another Inquiry into National Competition Policy in Australia, essentially to update the Hilmer recommendations ? • Refining the competition policy settings for Australia in the 21st century and continuing the current momentum. • Progressing the competition reform agenda of the Council of Australian Governments (COAG). • Building on current Government policy initiatives towards less regulation and more effective ‘best practice’ regulation. • Harmonising state-based sectoral access regimes. • Identifying specific sectors deserving of access regimes. • Undertaking a general stock take on competition law – and perhaps pruning some anachronistic aspects. 41 17752725.ppt
  • 43. Our international practice Disclaimer The purpose of this presentation is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Norton Rose Australia on the points of law discussed. No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any constituent part of Norton Rose Group (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton Rose Canada LLP or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their respective affiliates. 43 17752725.ppt