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Declaration of services

Obtaining access under the National Access Regime is a two stage process. The first stage involves the Council considering applications seeking the ‘declaration’ of a service (or services) before making a recommendation to the designated Minister, who then determines whether the service should be ‘declared’. The second stage is a negotiate-arbitrate process, whereby the parties ─ the access provider(s) and the access seeker(s) ─ first try to negotiate commercial agreement on the terms and conditions of access. There is recourse to binding arbitration by the Australian Competition and Consumer Commission (ACCC) in the event that the parties are unable to reach agreement via commercial negotiation.

The Council cannot recommend that a service be declared unless satisfied of all of the declaration criteria set out in s 44CA of the CCA (previously, s 44G(2)). The designated Minister cannot declare a service unless also satisfied that the same criteria in s 44CA of the CCA (previously, s 44H(4)) are met.

Under s 44J of the CCA, Council may decide to recommend to the designated Minister that an existing declaration be revoked. In making this decision, the Council must have regard to the object of the Act. The Council cannot recommend revocation of a declaration unless it is satisfied that, at the time of the recommendation, s 44F(1) would prevent the making of a declaration application or s 44H(4) would prevent the service from being declared.

As a result of the Competition and Consumer Amendment (Competition Policy Review) Act 2017 (Amendment Act), passed in October 2017, material amendments were made to Part IIIA of the CCA, including the declaration criteria in s 44CA of the CCA.

The current declaration criteria, which the Council and Minister must consider before recommending or making a declaration respectively, are reproduced in Box 2-1.

Box 2‑1 Declaration criteria (section 44CA of the CCA)

(1) The declaration criteria for a service are:

(a) that access (or increased access) to the service, on reasonable terms and conditions, as a result of a declaration of the service would promote a material increase in competition in at least one market (whether or not in Australia), other than the market for the service (criterion (a)); and

(b) that the facility that is used (or will be used) to provide the service could meet the total foreseeable demand in the market:

(i) over the period for which the service would be declared, and

(ii) at the least cost compared to any 2 or more facilities (which could include the first mentioned facility) (criterion (b)); and

(c) that the facility is of national significance, having regard to:

(i) the size of the facility or

(ii) the importance of the facility to constitutional trade or commerce, or

(iii) the importance of the facility to the national economy (criterion (c))

(d) that access (or increased access) to the service, on reasonable terms and conditions, as a result of a declaration of the service would promote the public interest (criterion d)

(2) For the purposes of paragraph (1)(b):

(a) if the facility is currently at capacity, and it is reasonably possible to expand that capacity, have regard to the facility as if it had that expanded capacity; and

(b) without limiting paragraph (1)(b), the cost referred to in that paragraph includes all costs associated with having multiple users of the facility (including such costs that would be incurred if the service is declared).

(3) Without limiting the matters to which the Council may have regard for the purposes of section 44G, or the designated Minister may have regard for the purposes of section 44H, in considering whether paragraph (1)(d) of this section applies the Council or designated Minister must have regard to:

(a) the effect that declaring the service would have on investment in:

(i) infrastructure services; and

(ii) markets that depend on access to the service; and

(b) the administrative and compliance costs that would be incurred by the provider of the service if the service is declared.

In making its recommendation on an application for declaration of service(s), the Council undertakes a public consultation process. This usually involves:

  • publishing the application and seeking submissions on the application from the service provider and other interested parties
  • publishing a draft recommendation setting out the Council’s assessment of the application
  • seeking submissions on the draft recommendation, and
  • preparing a final recommendation to the designated Minister.

When the designated Minister receives the Council’s final recommendation, s/he must decide whether or not to declare the service, applying the same declaration criteria as the Council.

When the Council receives an application for declaration of service(s), the Council is required to make its recommendation to the designated Minister within 180 days from receipt of an application. If the designated Minister does not make and publish a decision within 60 days of receiving the Council’s recommendation, the designated Minister is deemed to have made a decision in accord with the Council’s recommendation and to have published a decision to that effect.

Ministerial decisions in respect of declaration applications are subject to limited merits review by the Australian Competition Tribunal (Tribunal). The Tribunal has 180 days to make its decision, and is limited to considering the material that was before the designated Minister or, in the case of a deemed decision, the material that was before the Council (unless the Tribunal requests additional information).

In contrast, there are no procedural requirements set out in s 44J of CCA in relation to any Council consideration of whether it should make a recommendation to the designated Minister to revoke a declaration.

If the Council makes a recommendation to the designated Minister under s 44J of the CCA that a declaration be revoked, the designated Minister must either revoke or decide not to revoke the declaration. If the designated Minister does not make and publish a decision within 60 days of receiving the Council’s revocation recommendation, the Minister is deemed to have made a decision in accord with the Council’s recommendation to revoke the declaration. In the event the designated Minister decides not to revoke a declaration following a recommendation to do so by the Council, the provider of the declared service may apply to the Tribunal for a review of the Minister’s decision.

Where a service is declared, the negotiation and arbitration stage of the National Access Regime is enlivened. Any person seeking access to the service (not just the declaration applicant) has a right to negotiate with the provider of the declared service. It is expected that an access seeker will negotiate the terms and conditions of access directly with the service provider. If commercial negotiations are unsuccessful, then the access dispute may be arbitrated by the ACCC. This ‘light handed’ regulatory approach is intended to encourage commercial resolution with minimal regulatory intervention where possible.

Regulatory intervention occurs only in the event that an access seeker and service provider are unable to reach commercial agreement and an access dispute is notified (by either party) to the ACCC. The ACCC has broad scope to make orders to resolve an access dispute — although it must do so within the terms set out in Part IIIA of the CCA including, in particular, the factors or safeguards to the rights of service providers and existing users (set out in s 44W of the CCA). Ultimately, if the ACCC is unable to arrive at access terms that appropriately recognise the interests of an infrastructure owner, then it does not have to require access to a declared service.

Providers of declared services to which an access seeker has rights under an ACCC arbitration determination are subject to a prohibition against preventing or hindering access to those services under the determination (s 44ZZ of the CCA). Service providers are not required, however, to seek regulatory approval in relation to their day to day business decisions or their technology or investment choices, nor do access seekers have a veto in relation to these matters.

As at 30 June 2020, one service was declared under Part IIIA (see Table 2‑1).

Table 2‑1 Declared services

Service

Duration

Goldsworthy Railway Service (WA)

Expires 20 years from 19 November 2008

There is an exemption from access regulation available for services that would be provided by greenfields infrastructure. A person with a material interest in a proposed new infrastructure facility can apply to the Council for a service to be provided by that new facility to be ineligible for declaration. For a proposed service to be ineligible for declaration, one or more of the declaration criteria must not be able to be satisfied. An ineligibility decision will apply for a period of at least 20 years.[1] Further, a service provided by Commonwealth, State or Territory government-owned infrastructure cannot be declared if the construction and operation of the facility was subject to an approved competitive tender process.

Under the National Access Regime, a facility owner can volunteer an access undertaking to the ACCC setting out the terms on which access will be granted. There is also a process by which a State or Territory access regime can be ‘certified’ as effective (see below). Where an access undertaking is accepted by the ACCC, or a State or Territory access regime is certified as effective, the relevant services are excluded from the prospect of declaration.

[1] No applications for an ineligible service ruling under Part IIIA have been made since this provision was enacted in 2010.