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Focus: Proposed amendments to the National Access Regime

10 November 2009

In brief: The Government has introduced a Bill to amend the National Access Regime that is aimed at improving regulatory certainty and streamlining administrative processes. Partner Jacqueline Downes (view CV) and Lawyer Rebecca Cope explain.

How does it affect you?

The Trade Practices Amendment (Infrastructure Access) Bill:

  • provides for new statutory time periods within which regulators must make decisions;
  • limits the scope of merits reviews by the Australian Competition Tribunal to information that was provided to the original decision-maker;
  • gives the Minister the ability to make upfront decisions as to whether or not a proposed infrastructure project is ineligible to be a declared service;
  • enables service providers to submit an access undertaking to the Australian Competition and Consumer Commission with fixed principle that will apply beyond the expiry of the undertaking;
  • eliminates health and safety as a declaration consideration; and
  • limits an 'effective access regime' to certified regimes.

Background

The National Access Regime (the Regime) in Part IIIA of the Trade Practices Act 1974 (Cth) (the TPA) is designed to promote competition in markets that depend on infrastructure that cannot be economically duplicated by providing a mechanism for third parties to gain access to that infrastructure.

Access is provided under the Regime, in three ways:

  • if a service is declared under the Regime, the parties can agree on the terms of access, or the Australian Competition and Consumer Commission (the ACCC) can make a determination setting out the terms of access;
  • through an industry-specific state or territory regime; or
  • under the terms and conditions of an access undertaking given by the service provider that has been approved by the ACCC.

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New statutory time periods

The Trade Practices Amendment (Infrastructure Access) Bill (the Bill) proposes to introduce statutory time periods within which the various regulators must make decisions under Part IIIA of the TPA. If the Bill is passed in its current form, the National Competition Council (the NCC), ACCC and the Australian Competition Tribunal (the Tribunal) will have to make decisions or recommendations within a period of 180 days and the Minister must make decisions within 60 days of receiving a recommendation from the NCC. In the case of ACCC decisions in relation to competitive tender processes, a decision must be made within 90 days.

These time periods would be subject to 'clock stoppers', certain events that will stop the clock and extend the time before which a decision or recommendation must be made. For NCC recommendations and ACCC and Tribunal decisions, the clock will be stopped when:

  • making requests for information; and
  • the regulator and the parties to the action agree to stop the clock for a certain period.

For ACCC decisions, there are additional proposed clock stoppers, including:

  • for public consultation periods;
  • where the ACCC defers consideration of an access undertaking or an arbitration; and
  • where the ACCC is conducting an arbitration before the Tribunal rules on whether to uphold a decision to declare a service.

If the Minister or the ACCC does not make a decision within the relevant time period:

  • the Minister will be deemed to have made a decision in line with the NCC's recommendations; and
  • the ACCC will be deemed to have rejected an undertaking or code, approved a competitive tender process, or, in the case of arbitration of access disputes, preserved the status quo between the parties.

If the NCC fails to make a recommendation within the time period, it must write to the Minister explaining the reasons for delay and requesting an extension of time. The NCC must also then publish a notice in a national newspaper advising that it has extended the time period.

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Limits on merits review

The Bill proposes to limit the information able to be examined by the Tribunal on a merits review to the information submitted to the original decision-maker. The Tribunal will, however, be able to seek additional information from the parties if the information submitted to the original decision-maker requires clarification.

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Proposed infrastructure

Currently, a person who is considering building an infrastructure facility cannot ask the designated Minister for a binding ruling on whether the proposed facility would be declarable. Under the Regime, if a service is declared, access seekers have a right to arbitration if commercial negotiations fail.

The Bill proposes to allow a person with a material interest in a new infrastructure facility to apply for a decision that a service to be provided by that facility is ineligible to be a declared service. The NCC will make a recommendation to the Minister as to whether or not a proposed facility should be ineligible.

The amendment aims to increase certainty for potential investors in new major infrastructure projects. A proposed facility must be structurally separate from an existing facility or a major extension of an existing facility.

If a service is ineligible for declaration, it then cannot be subject to a declaration for at least 20 years.

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Fixed principles

The Bill proposes to allow service providers submitting an access undertaking to the ACCC to include one or more terms that are to apply for a certain period beyond the expiry of the access undertaking, to be known as 'fixed principles'.

The explanatory memorandum lists examples of terms that may be fixed principles, including:

  • a parameter such as an asset value;
  • a formula or methodology such as an efficiency benefit sharing formula;
  • an obligation such as the standard at which the service is to be provided; and
  • a process such as a procedure that the service provider will follow before undertaking new investment in the relevant facility.

The aim of this amendment is to allow infrastructure investors to better manage future regulatory risk by fixing core variables.

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Declaration test

The declaration test will no longer include the consideration of health and safety issues, as this is more properly managed by other legislation.

In addition, only state or territory access regimes that have been certified will be considered an effective access regime that cannot be declared. A state or territory regime that is not certified can no longer be considered an effective regime and therefore is not relevant to the question of whether the service should be declared.

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What's next?

The Bill was introduced into Parliament on 29 October 2009. The Government has not yet given any proposed time period within which it expects to pass the Bill. A majority of the provisions of the Bill will come into effect once it receives Royal Assent.

For further information, please contact:

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