The Australian Competition and Consumer Commission will allow Telstra Pay TV Limited to continue to resell Foxtel and Austar's new digital pay TV services on condition that customers also acquire telecommunications services from Telstra Corporation Limited.
On 11 February and 30 April 2004, Telstra and Telstra Pay TV sought immunity* from prosecution under the third line forcing provisions of the Trade Practices Act 1974.
The ACCC has previously allowed immunity to stand in respect of similar conduct relating to Telstra Pay TV's resale of Foxtel's analogue pay TV service in 2002, and Austar's previous supply of digital services in 2003.
The ACCC's assessment involved determining whether the public benefits associated with the incorporation of pay TV services into Telstra's existing bundles of telecommunications services would outweigh any public detriments resulting from the conduct.
"In reaching its decision, the ACCC assessed the likely effect of adding pay TV services to Telstra's bundles of telecommunications services on the future state of competition in the markets for pay TV and telecommunications services", ACCC Chairman, Mr Graeme Samuel, said today.
"The primary public benefits of Telstra's bundling of pay TV and telecommunications services are the discounts or bonus telecommunications services Telstra will provide some customers.
"The conduct will enable Telstra Pay TV to continue to be a participant in the pay TV market. However, the ACCC recognised that Telstra Pay TV's incentive to aggressively compete with Foxtel will likely be limited by Telstra's equity interest in Foxtel.
"While there may be increased scope for competition between Telstra and telecommunications firms in telecommunications service markets in the short term, the effect of the Telstra's bundling of pay TV and telecommunications services in the long term is less clear.
"The ACCC is particularly concerned that the competitive environment surrounding the supply of pay TV and telecommunications may have diminished since the 2002 notifications.
"However, based on current information, it does not appear likely that competition in the telecommunications service market will be decreased.
"Therefore, on balance, the ACCC decided that not revoking Telstra and Telstra Pay TV’s immunity in relation to these notifications would be in the public interest.
"The ACCC will continue to monitor the effects of Telstra and Telstra Pay TV's bundling conduct on competition in the future".
* Notification provides immunity from legal action by the ACCC or any other party for potential breaches of the exclusive dealing provisions of the Trade Practices Act. Third line forcing is a specific type of exclusive dealing conduct that involves the supply of goods or services on condition that the purchaser acquires a second good or service from another supplier.