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Wednesday, 25 February 1987
Page: 756

(Question No. 4989)

Mr Macphee asked the Minister for Communications, upon notice, on 28 November 1986:

(1) Has Telecom participated in meetings of a Product Protection Committee; if so, (a) what is the purpose of the committee and (b) have senior management and the Telecom Board of Commissioners been kept informed of its activities, including having access to the minutes of the committee and any sub-committee.

(2) Did he state in a letter to me, dated 18 August 1986, that Telecom has no Product Protection Committee or Product Protection Group in the Directories area.

(3) Does he intend to take any action if such a committee exists.

(4) What proportion of Telecom's annual profit is derived from commissions it receives on its Yellow Pages directories service.

(5) What has been the net annual profit from Telecom's Yellow Pages in each year since 1980-81.

(6) Why did Telecom, when making the payment of about $US1 million to the owners of Australian Directory Services (ADS) in connection with their acquisition of Directories Australia make the payment through a reduction in royalty payments to Telecom to Directories Australia instead of ADS, which had allegedly suffered significant additional costs in developing alternative selling records as a result of Directories Australia's behaviour.

(7) If ADS did incur additional costs and part, or all, of the $1.5m was compensation for that loss, why was it paid to Directories Australia as capital rather than to ADS as revenue?

Mr Duffy —The answer to the honourable member's question, based on advice from the Australian Telecommunications Commission, is as follows:

(1) There is no ``Product Protection Committee'' in the Directories area of Telecom. Telecom, on its own account, and in conjunction with its contractor has from time to time engaged in the normal business of competitive analysis, but at all times within the bounds of normal industry ethical standards. Senior Telecom and contractor management form a group called the Yellow Pages Management Group (YPMG) whose purpose is to provide overall direction to the management of the Yellow Pages and to approve expenditure on items such as Promotion and Advertising and Market Research. Product protection is usually an item on the agenda of YPMG meetings.

(2) Yes.

(3) There is no such committee (See reply to (1) above).

(4) and (5) Telecom regards details of profit derived from the Yellow Pages directory service as commercial-in-confidence.

(6) Telecom contributed to the settlement by an offset in royalties as a matter of convenience to Telecom. As no budget had been allowed for this event, Telecom took the view that it was simpler to effect payment by issuing a credit note to Directories (Aust) (who had recently been taken over by the owners of ADS) which allowed them to offset the about $US1 million against royalty payments.

(7) Telecom did not co-operate with Australian Directory Services (ADS) to transfer a revenue payment to a capital payment. There was no discussion to this effect between Telecom and ADS. Telecom was not a party to, nor was it aware of Australian Directory Services internal accounting procedures which would have resulted in tax benefits by ADS.