Telstra hit by $18.55 million fine

Telstra will not appeal a massive $18.55 million fine for anti-competitive behaviour by blocking small telco players access to telephone exchanges around Australia.

The judgment is the biggest penalty for an Australian telecommunications company but lags behind the record $36 million handed out to cardboard maker Visy when it was headed by the late Richard Pratt.

The corporate watchdog had pushed for a $40 million fine for the breaches, which occurred between January 2006 and February 2008 under the Sol Trujillo reign at Telstra.

However, Justice John Middleton believed the telco's conduct was not deliberately anti-competitive.

The Australian Competition and Consumer Commission (ACCC) had taken Telstra to the Federal Court of Australia for refusing competitors access 27 times to installing ADSL equipment at seven exchanges around Australia.

Justice Middleton said Telstra's relevant managers and employees who denied the access were either not properly trained in regard to access obligations or failed to comply with their training.

In his 86-page judgment, he said Telstra had no adequate system in place to check on compliance.

"In most cases Telstra staff did not understand their responsibilities or roles within Telstra," Justice Middleton said.

He also said Telstra had shown no remorse during the proceedings.

"I am not satisfied, however, that Telstra has demonstrated any remorse, nor that it appreciates the seriousness of its conduct," he said.

A Telstra spokeswoman said the telco had acknowledged mistakes were made and would not appeal the decision.

"Since these events occurred, Telstra has taken proactive steps to improve our processes in this area, and more generally, to improve service to our wholesale customers," the spokeswoman said.

"We have learned a lot as a result of this process and like many changes at Telstra, we are endeavouring to improve our performance.

"Since the start of the case, we have acknowledged that mistakes were made. We accept the judgment which has been handed down - we will not be appealing."

Telstra had refused other telco providers access to seven key metropolitan exchanges in Perth, Melbourne, Adelaide and Brisbane for the connection of their broadband equipment.

It had told the telcos that the main distribution frames in the exchanges were "capped" but in fact, there was capacity or it could have been made available.

"Whilst I have accepted the conduct did not occur with deliberate anti-competitiveness in mind, the conduct did not occur by accident or by inadvertence," Justice Middleton said.

ACCC chairman Graeme Samuel said Telstra had breached the Trade Practices Act and the Telecommunications Act and said the court's decision vindicated the ACCC pursuit of Telstra.

"The purpose of access obligations is to encourage downstream competition for the benefit of consumers," Mr Samuel said.

"The failure to comply with those obligations impedes that competition and therefore harms consumers."

Justice Middleton said the issue of costs in the drawn-out case had been deferred but he expected there would be substantial costs awarded in favour of the ACCC.

Telstra must pay the fine to the Commonwealth.