Telcos have called for the Government not to extend the Australian Competition and Consumer Commission's powers in the telecommunications arena.

Both Optus and Vodafone have made submissions to the Dawson Inquiry--the Treasurer's Inquiry into the competition provisions of the Trade Practices Act--which is looking into issues such as whether the Australian Competition and Consumer Commission (ACCC) deals fairly with the affairs of individuals. Other IT organisations, such as the Australian Information Industry Association (AIIA) have also made submissions.

Vodafone's submission to the Inquiry argues that regulation that inhibits business and undermines the ability of firms to compete can cause as much harm as firms that breach the Trade Practices Act.

"There is no evidence of serious deficiencies in generic competition laws to warrant the introduction of further controls in Part IV and Part VII, especially those controls that grant additional powers to the ACCC," Vodafone said in its submission. "The ACCC has broad powers that need no further broadening."

"These powers should not be extended without distinct and identifiable reasons."

Vodafone also questioned the need for the proposed introduction of an "effects" test into generic competition law, given that the telecommunications-specific regulation in the Trade Practices Act was intended to be transitional while effective competition was established.

"The proposed 'effects' test does not improve on the current test," Vodafone believes. "Moreover, the 'effects test' does not address the central issue of how to distinguish between unacceptable anti-competitive conduct and acceptable pro-competitive conduct."

The mobile carrier argues that companies should be encouraged to compete aggressively, through taking advantage of new and superior products, greater efficiency and innovation.

Optus called for greater reliance on conduct regulation, as opposed to market structure-based regulation. The telco believes that the ACCC's current application of one of the sections may impede competition and constrain market development. "It can inappropriately reduce the ability of Australian industry to attain sufficient scale to compete locally and internationally," Optus argued.

However, Optus does believe that an effects test should be introduced into section 46 of the Act.

The nation's second largest carrier also believes that the current merger test prevents Australian companies from attaining critical mass, which enables them to compete on an international scale. "The test is seldom applied within a truly global context," Optus said. "Therefore it ties the hands of Australian businesses when competing in overseas markets with incumbents that have available to them significantly larger economies of scope and scale."

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