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Economics Legislation Committee
Australian Competition and Consumer Commission

Australian Competition and Consumer Commission


CHAIR: Good morning, Chairman, and other officers from the Australian Competition and Consumer Commission. I invite you to make a brief opening statement, or we can get straight into questions, if you choose.

Mr Sims : We are happy to go straight to questions, Chair.

Senator CONROY: Could I just ask, Chairman: who will handle the telecommunications questions that I have? My very favourite, Mr Cosgrave, does not appear to be there.

Mr Sims : Me.

Senator CONROY: You are going to handle them, okay. Is Mr Cosgrove not with us?

Mr Sims : No. We have found in the past that we really have not had that many questions on that side, so we did not ask them to come up from Melbourne. But I am on the Communications Committee; I am across it, Senator!

CHAIR: We will come back to you, Senator Conroy. Chairman, what is the current financial situation at the ACCC?

Mr Sims : The current financial situation of the ACCC is now, I am pleased to say, excellent. We did go through problems, Senator, as was well publicised. I guess it is fair to say, six months ago our financial position was fairly diabolical in terms of—we were looking out at losses of about $25 million a year. Had we had to accommodate that with staff cuts, that probably would have reduced our staff by over a third, which would have affected our effectiveness quite badly. But we have now got extra money from the budget and we have made a VR program where we have reduced our staff down from about 840 to about 730, which we can accommodate and still keep our effectiveness. And we now are in a position where we have the funding to stay at that staffing level. So our funding is now fine, at the moment.

CHAIR: Your term was 'excellent', at the beginning. But you have received extra funding from the government, to assist you to deal with the financial challenges that you had six months or so ago.

Mr Sims : That is right. As I say, absent receiving any funding, we would have had to reduce our staff by well over a third, and it would have caused us real problems with effectiveness. We got about $24 million in the mid-year financial top-up, and we got $65 million over the forward estimates, and that has meant that our finances are now fine.

CHAIR: What led to the ACCC having the financial challenges that it had—to use your quote—six months ago?

Mr Sims : Look, these things are always complicated. I think, in essence, what was causing us a lot of problems was that the efficiency dividends had a very big effect on us—

CHAIR: These are the efficiency dividends that were imposed in previous years, under the previous government.

Mr Sims : That's right. What we were facing—we are an unusual organisation; our budget is 60 per cent staffing, the rest is legal, which goes with the staffing to run cases, and then accommodation and other fixed costs. So essentially, efficiency dividends came out of staffing. And we were facing not just efficiency dividends up to now but—you may be aware—there was a 2¼ per cent efficiency dividend which over four years would have knocked us down by about 10 per cent, which is about 16 per cent of our staff. So the combination of the efficiency dividends that had been and those that were in train really had the main effect, Senator.

CHAIR: You mentioned that you have made some adjustments. I believe you said:

We have just had an increase in our funding for 2013-14, which the government has very kindly provided in the additional estimates process. That sorts out our position for 2013-14. We are making a few budget adjustments to accommodate that—

What adjustments have you made?

Mr Sims : The essential adjustment is a voluntary redundancy program. We were at about 840 people—that is what we peaked at. The VR program has taken us down to 730 and we have now got funding to support 730 going forward. Had we not had the injection, we would have gone down to a little over 500. So the budget money has made a huge difference.

CHAIR: It has made it possible for you to make the adjustments to continue to operate in a financial situation which you term as 'excellent'.

Mr Sims : That is right. I have to acknowledge that, Senator. It would be wrong not to acknowledge that without that money we would have been in a dreadful position.

CHAIR: How much extra money were you given?

Mr Sims : We were given, as I said, about $24 million in the mid year accounts which applied for 2013-14, and then we were given $65 million in operating expenditure plus a little bit extra in capital over the forward estimates years. So our financial position is now, I am pleased to report, sustainable.

CHAIR: Very good. Since Mr Cassidy's departure, I understand that you have taken over the role of the CEO.

Mr Sims : There have been new developments as of last Friday, Senator. When Brian Cassidy left I did take on that role. It is fair to say that under the act I am the agency head—the chairman is the agency head anyway. My predecessors were also the agency heads. What I found personally out of the whole financial set of issues was that I probably was a bit too much playing the chairman role and not the agency head role and I was not following the finances enough. I admit that. But now I am going to make sure that I stay on top of those. I have now appointed Rayne de Gruchy as the chief operating officer so now we have what I think is a proper structure going forward. So I am the chairman and agency head and Rayne will be the chief operating officer. I will look after all the policy statutory decision-making; Rayne will look after the underlying health of the organisation.

CHAIR: So you are still effectively the CEO—

Mr Sims : Yes.

CHAIR: but you have put in place arrangements that you think will make that sustainable.

Mr Sims : Yes, Rayne will support me in the day-to-day running of the organisation so I can put my main focus on the operating and policy issues that we deal with.

CHAIR: We might ask some more questions in future estimates just to see how that is going, but it sounds like a reasonable approach. There has been much debate in the papers in recent months about the use of the secondary boycott provisions, in particular, events in relation to a site in Melbourne where Boral sought an injunction for certain conduct but the ACCC did not take any action. Why did the ACCC not take action when Boral's actions suggested that there might have been a case?

Mr Sims : That is a good question, Senator, and I totally understand why that is being asked, because the action in Melbourne was quite visible. I was in Melbourne when a bit of it occurred and I did ask my staff to have a look at it. What we found when we had a first look at it was that however else it appeared, we had difficulty getting evidence when we spoke to people who, I think it is fair to say, were reluctant to speak openly—though that is conjecture. The answer we got was not cooperative.

The difference between us and Boral was that Boral were able to seek an injunction and could do that with a lower evidentiary hurdle than we need to eventually build a case. We have since looked at it further. We have been in close discussion with Boral and Grocon and we now feel that we do have enough to launch a proper investigation. So we have a dedicated team undertaking an in-depth investigation into that matter. I cannot comment further on it and I cannot foreshadow where it will get to because at the end of the day we have got an evidentiary hurdle—

CHAIR: Yes, I understand that, but it is an ongoing—

Mr Sims : It is now a proper investigation, properly resourced.

CHAIR: I will be interested to see how that goes as well.

Senator CONROY: As I flagged, I was hoping to chat with Mr Cosgrave. I know that he will be disappointed that—

Mr Sims : He is going to be devastated, but I could give him your number, Senator!

Senator CONROY: I am sure that he will be devastated. In the ACCC's annual compliance report into Telstra's structural separation undertaking, I see from the report that confidential wholesale customer data was made available to staff in a telco's retail division again. Is that correct?

Mr Sims : Yes.

Senator CONROY: I also note that certain ADSL enhancements were implemented for Telstra retail customers before they became available for wholesale customers.

Mr Sims : Correct. Those were the two main things we identified.

Senator CONROY: Could you take us through exactly what happened in those instances?

Mr Sims : I can to a certain level. They were very important matters. As you know better than most, that is what we are required to report on under the structural separation arrangements. The structural separation arrangements of course were a fantastic enhancement of what we were able to do, because Telstra have much stronger obligations to make sure they are even-handed with their wholesale competitors. In the customer data one, the way the system was set up allowed Telstra retail people to look at what really only Telstra wholesale people should have been able to look at. That did give them the opportunity at least to see things like when people had repairs, when their contracts might be coming to an end. What we do not know and what we are still investigating is the extent to which it was actively sought out and used versus it being possible and they may have stumbled across it. How it was used is an issue in terms of whether we take action.

Senator CONROY: Should they have had access to it? Should that have been closed off to them under the arrangements?

Mr Sims : With the structural separation arrangements, we are now finding that we are getting very good cooperation from Telstra. My own experience—I have, off and on, had involvement with telcos over about 20 years—is that their systems are such that they are systems of an integrated organisation. They themselves have trouble running their commercial business. It is hard for them, in an organisation of their size, to make sure that that does not happen. But they are now working on it. We think their cooperation is actually excellent. We genuinely think they are trying to solve the problem. But the systems are such that it takes a bit of time.

Senator CONROY: So solving that particular problem would be: retail people do not get access—

Mr Sims : Yes.

Senator CONROY: Even inadvertently to this information, which would be the preferred outcome?

Mr Sims : That is what Telstra are working on, and we genuinely believe that they are doing that in excellent good faith.

Senator CONROY: The ADSL enhancements were mysteriously implemented for Telstra's own customers before they became available for wholesale customers. How did that come about and what remedy do you have?

Mr Sims : It is a statistical fact that they were getting done more for Telstra customers than for the competitors. Telstra point out that there were a range of circumstances that led to that—just where their customers were or others weren't. We are having a closer look to get to the bottom of that. We have not got to the bottom of that. But, clearly, as you imply, it is not a good look.

Senator CONROY: It is certainly not a good look. In the sense of the data you may not be able to ascertain whether they exploited an unfair commercial advantage, but from enhancing their own customers' access to new technology or enhancements, that is clearly a commercial advantage to them.

Mr Sims : We are looking at them very closely. These are very important points, as you know better than most. Part of the process is to, through these compliance reports, shine a light on these things, and that helps enormously—that seriously does get people's attention—but also then to investigate whether there is a breach of the SSU, and that is where you need evidence to form a view of whether there is a breach and then, frankly, secondly, whether it was technical, inadvertent, or more sinister. We are working through all that.

Senator CONROY: The purpose of the SSU—the undertakings they have given to you—and I appreciate the point you are making; they are now publicly on the record as supporting the structural separation, which I think after many years—

Mr Sims : Over 20 years for some of us—25 years.

Senator CONROY: is great to see. But the purpose was to get an end to the vertical integration and fixed line telecommunications networks and eliminate the opportunity for Telstra to discriminate in favour of its retail operations. That is the whole basis of what we have been trying to do, what the ACCC have got the power to try to do. That is at the core of what the SSU is about.

Mr Sims : That is right, and I think the SSU has given us a real opportunity—it has transformed where we were, because the obligations it has are clearer and sharper. We have noticed that Telstra have really got on with the spirit as well as the letter of it, so we are very confident.

Senator CONROY: I agree. I think they have jumped the Rubicon. They are now focused on a very different business model—but they can speak for themselves. I have certainly got that sense, and I have not been directly involved with them for virtually a year. In your view, eliminating the opportunity for Telstra to discriminate in favour of its retail operations is in the long-term interests of users.

Mr Sims : I think it is an appropriate competition outcome to make sure that Telstra treat their wholesale customers the same as they treat their retail operation. It is a very common issue when you have got these infrastructure access issues. We see it in wheat boards and a whole range of other areas—but it is crucial. Competition works, and you want competition to work in the most even-handed way. So it is crucial that you get the underlying commitment that we have got on the SSU, which is even treatment.

Senator CONROY: I want to talk about the existing legislative provisions pertaining to structural separation. The Telecommunications Act defines structural separation as:

… not supply fixed-line carriage services to retail customers in Australia using a telecommunications network over which Telstra is in a position to exercise control …

And/or not being in control of:

… a company that supplies fixed-line carriage services to retail customers in Australia using a telecommunications network over which Telstra is in a position to exercise control; and

That is 577A. So the key test for structural separation is whether Telstra is in a position to exercise control over a telecommunications network, supplying fixed-line carriage to retail customers. That is my interpretation.

Mr Sims : Yes.

Senator CONROY: I want to explore this definition from the perspective of the ACCC. Would Telstra be in a position to exercise control of a telecommunications network if it owned that network?

Mr Sims : Having been at the ACCC now for two and a half years or a bit more, I find that every time these questions come up, you really do need to look at the circumstances, get the legal advice, turn it upside-down, look at it from five different perspectives before you can form a view. It certainly would be something to look at. If they owned it—

Senator CONROY: Telstra do currently own the copper network. Are they exercising control over it?

Mr Sims : They are because it is their network and they are in full control of all of the decision making. So the question is who would control what decision making if things were to change going forward.

Senator CONROY: Would Telstra be in a position to control the telecommunications network if it and/or an associate were in a position to exercise control of part of the network or the kinds of services provided on the network or the manner in which services were provided?

Mr Sims : These are certainly issues you would have to look at. I understand the point of the question. It would depend very much on what the future arrangements were as to who owns what—

Senator CONROY: You would want to be kicking the tyres of anything extensively. This is not a case of, 'Sure, tick and flick.' This is a serious question about whether the ACCC continues to protect consumers, as it has been doing, and ensures that we actually get real competition in this country as opposed to the sort of regime we have had previously.

Mr Sims : We have got that role and we would take that very seriously.

Senator CONROY: I am not sure if you are aware of it, but advice from the NBN Co to the department during the caretaker period—so it was prepared in caretaker not under the previous government's influence—pointed out that purchasing the copper subloop from Telstra would be a very high risk proposition due to the unknown remediation bill, the ongoing maintenance costs, the useful life of the copper, the asbestos risk, the Legacy IT systems that run the network and the issues associated with Telstra for retaining ownership of the copper in the last seven per cent, which means that NBN Co would not be able to acquire all the Legacy systems relating to the copper network. For these reasons NBN Co itself advocated a managed service, whereby Telstra retains ownership of the copper CAN and continues to be responsible for operations and maintenance of the copper network. So the definition of structural separation refers explicitly to whether Telstra is in a position to exercise control of the telecommunications network. If NBN Co were to buy a managed service from Telstra and Telstra retains ownership of the network, the key question then becomes—in the ACCC's judgement—whether Telstra are still in a position to exercise control of the network.

Mr Sims : As you know, there are discussions between NBN Co and Telstra.

Senator CONROY: You are not involved in those, though?

Mr Sims : We get regular briefings on them. We are informed about where they are up to in a broad sense. Obviously, there is detail that we do not need. The issue of making sure that, however the arrangements work out, Telstra is not in a position to advantage itself—which is really the core issue here—is something that we would keep a very close eye on.

Senator CONROY: Under the Telecommunications Act, once the ACCC has accepted Telstra's structural separation undertaking it cannot be withdrawn. Is that correct?

Mr Sims : That is a very good question. The NBN one can. I do not know about the SSU one. I would have to take that on notice. I usually think that most of these things can be withdrawn by mutual agreement, but I would have to take that on notice.

Senator CONROY: Just to be clear, you have accepted the SSU?

Mr Sims : Yes, we have.

Senator CONROY: That was one of the conditions precedent of the definitive agreements.

Mr Sims : Correct.

Senator CONROY: As you know, we went considerable lengths and spent time on it. Mr Cosgrove had black hair at the beginning of it! Initially, Telstra was given a choice to voluntarily structurally separate or undergo functional separation. Just to confirm, under existing legislative arrangements—now that the SSU has been accepted—Telstra is no longer in a position to go down the functional separation path, is it?

Mr Sims : I would have to take that on notice as well. My understanding is that it is going down the path of the SSU. I have not heard anything to the contrary, but I would have to take that on notice.

Senator CONROY: Just to come back, you have indicated that you will probably take this on notice. Under what circumstances can the SSU be modified? Can the SSU be modified such that Telstra will not undergo structural separation under current legislation?

Mr Sims : I would have to take that on notice as well. Normally, with undertakings—now I am speaking more broadly across the organisation—companies can apply to change things and we can look at them. If there is agreement, they can be. But I would have to check in this particular case.

Senator CONROY: In terms of where Telstra are at, NBN seem to have a choice with Telstra. They can either purchase the copper sub-loop from Telstra—which then carries the remediation bill, ongoing maintenance costs, asbestos risks and legacy IT—or the legislation is amended. I am being very simplistic. I appreciate that you have taken it on notice. They seem to be the two choices faced by NBN Co and Telstra.

Mr Sims : These things are also all part of the discussions that are continuing between the government, NBN Co and Telstra.

Senator CONROY: The ACCC would not support the watering down the structural separation definition, would it?

Mr Sims : What I can say is that we want to make sure Telstra is not in a position where it can benefit itself over its competitors. That is the core issue for us, which we will be keeping a close eye on during the course of the discussions.

Senator CONROY: I just wanted to move onto a more practical area. This may not come up to your committee, so you might have to take some of these on notice. I want to talk about the broadband speed claims and the Competition and Consumer Act. The ACCC has done quite a bit of work on this over the years, as I recall. ACCC has released three information papers to inform ASPs and companies advertising broadband services over the years; one on ADSL in 2007, mobile broadband in 2009 and HFC and FTTP in 2011.

As I recall, the 2011 paper—I am going fast just to try and help—made the point that there are factors that effect broadband speeds that are within the RSP's control, such as backhaul capacity, split ratio and contention ratios—et cetera.

Mr Sims : Correct.

Senator CONROY: There are factors that are outside the RSP. To be very clear, you know what effects are at this level and at that level.

Mr Sims : Sometimes it is the mix of the two as well, but yes.

Senator CONROY: Yes, I am coming to that. Different technologies have different mixes, if I can put it to you that way, such as the number of users in the home accessing the service and type and location of content being accessed. I just want to make it clear from the outset that I want to talk to you about the things that are within the RSP's control. In 2011, in your information paper, the ACCC states:

In the 2007 and 2009 Information Papers, the ACCC expressed the view that "speed" claims should reflect data transfer rates actually experienced by individual end-users—not merely theoretical maximums. The ACCC recommended that ISPs avoid using 'up to' or 'peak' claims where stated data transfer rates were unachievable or unlikely to be achieved by end-users.

That is your position paper. Nothing has changed?

Mr Sims : That is consistent with our consumer advice generally because, if you stick to things that can rarely be achieved, that can be misleading.

Senator CONROY: You note that the key principle underpinning broadband speed claims is that headline claims must represent attainable speeds, which I think is the point you just made. Do you stand by that as a core principle?

Mr Sims : It is a core principle right across our consumer work. You really have to be getting what you are being told you are getting.

Senator CONROY: Putting to one side for the moment the decisions made by the RSP, including back-haul, contention ratios and CVC, and any speed limits imposed by the RSP itself, such as shaping, is it correct that on the fibre network the RSP will know the capability of the wholesale product being delivered by NBN Co from the POI to the premises?

Mr Sims : Sorry—that they will know the speed?

Senator CONROY: They will.

Mr Sims : I will take that on notice.

Senator CONROY: It is a piece of fibre that goes from there to there.

Mr Sims : I understand the question, but it has a technical element to it and I do not want to mislead you.

Senator CONROY: What will the RSP know about performance in an FTTN environment? I imagine this would be very similar to your 2007 ADSL paper. The speed attainable will be dependent on the length of the loop, the condition of the copper et cetera, but what will the RSP know about the capability of the wholesale product being delivered by NBN Co from the POI to the premises over FTTN?

Mr Sims : I will take it on notice, thank you. But I point out that, as I say, there are a lot of factors at work to know—

Senator CONROY: But I am being very specific. I am isolating factors that—

Mr Sims : And that is why I will take it on notice.

Senator CONROY: This performance will vary, as you would understand, due to things like weather conditions, for example. If it rains, Australians on the copper network regularly complain that their services change. No-one has claimed they have ever got faster; they 'change'. In your 2007 information paper on ADSL, you make the point:

If the stated speed cannot be provided to a single customer then it is misleading to describe a service as reaching "up to" that speed.

Do you consider this statement still to be accurate?

Mr Sims : It still reflects—I will say this—our general consumer work. These things have to be real and not misleading.

Senator CONROY: If, in ideal conditions—forget weather and other things—an RSP determines that it can deliver a VDSL service of, say, 38 meg to an end user, would it be appropriate for an RSP to market that product as an 'up to 100 meg' service? It knows it can only deliver 38, but it is advertising it as up to 100.

Mr Sims : The circumstance you are describing, if I accept the facts as you put them, would suggest that is misleading.

Senator CONROY: I was going to go to that. Broadly, in Australian consumer law, would it be misleading and deceptive for an RSP to sell a consumer a product priced at up to 100 megs when the service can only deliver, say, 38 megs and the RSP in question has a lower priced service at, for example, 50 megs?

Mr Sims : That would, at its face, given those facts, be misleading.

Senator CONROY: The ACCC attends NBN Co's product development forum, does it not?

Mr Sims : Yes, we do.

Senator CONROY: So you will have seen the recent FTTN/B product consultation paper from NBN Co—I am not sure if you personally have.

Mr Sims : The ACCC has, but I have not.

Senator CONROY: I am sure Mr Cosgrave is poring over this as we speak.

Mr Sims : He has it under his pillow, I am sure.

Senator CONROY: In this paper, NBN Co states that it proposes to retain the existing fibre AVC tiers on FTTN, with the exception that speed tiers above 25/5 will be 'up to' speed tiers. The paper states:

Selecting the correct speed tier will be the responsibility of the end user and the provider. For example, NBN Co does not intend to prevent end users and/or providers from ordering the up to 100 Mbps speed tier for a service that would typically experience speeds of less than 50 Mbps.

This is NBN Co, in writing, saying, 'We don't mind if you defraud Australian consumers.'

Mr Sims : As I say, I have not looked at that, but we have warned the sector as a whole with this issue that we will be watching speed claims, because it is going to be more fraught for consumers.

Senator CONROY: But this is the NBN Co itself stating that it does not mind—

Mr Sims : I have not seen the paper.

Senator CONROY: selling a service of up to 100 megs when it knows that the typical experience is of speeds less than 50 megs. That is just fraud.

Mr Sims : I will take it on notice. Under our terms it is proceeding.

Senator CONROY: It is in black and white. This is misleading, isn't it?

CHAIR: Senator Conroy, you have had 20 minutes and we have a whole range of other senators with limited time. You have had more time than anyone else's had. Another minute.

Senator CONROY: Have you discussed with NBN Co their SAU and/or WBA? Have you discussed this with them? I do not mean you personally but the ACCC.

Mr Sims : We have been talking to all the players in the market and putting out material, knowing that we are going to a faster speed world, for people to make sure that they are not misleading consumers. It has been a consumer priority for a number of years and that will remain so.

Senator CONROY: So the ACCC has now published information papers on speed plans for ADSL, mobile broadband, HFC and FTTP. Do you anticipate that you will release an information paper on FTTN style access technologies or do you think that the ADSL paper stands—the principles behind that?

Mr Sims : Again, I would have to take that on notice. What I will say is that we will keep—just as you kindly point out—we have got a lot of material out there. We shall keep this as a focus. Whenever you have transformative technology—

Senator CONROY: This is an old technology.

Mr Sims : But there are a few changes going on.

Senator CONROY: This is not remotely a new technology—it has been around for 20 years.

Mr Sims : I understand what you are saying.

Senator CONROY: On 14 August last year the ACCC released a consultation paper on broadband monitoring and reporting. You note this paper that:

Information on the real-world performance of broadband services is important to enable consumers to choose the right service for their needs.

Do you still agree that the information on the real-world performance of broadband services is important to enable customers to choose the right service for their needs?

Mr Sims : Indeed, we do.

Senator CONROY: In the submission, the NBN Co noted—unfortunately it is very long, so I may not quote that, because it will take my entire five minutes—

CHAIR: You don't have five minutes. This is your last question.

Senator CONROY: The consultation paper notes that the ACCC intends to reach a position paper in 2014 outlining how it will implement a broadband performance monitoring reporting program, if the necessary funding was obtained. Do you have that and are you going to issue that paper?

Mr Sims : We are putting out a paper in the next week or so.

Senator CONROY: And are you planning on introducing the monitoring that you have talked about?

Mr Sims : We have always said that is subject to funding.

Senator CONROY: Did you put in a bid for it—the money?

Mr Sims : The frank answer to that is in the context of the things—

Senator CONROY: No, I heard what you said before.

CHAIR: Let him answer!

Mr Sims : We just stuck to our major issues. So we haven't yet put a request in.

Senator CONROY: So you don't have money to implement the broadband monitoring program?

Mr Sims : There are a lot of technical issues to go in that monitoring. We are putting out a paper on that.

CHAIR: Thank you, Senator Conroy.

Senator CONROY: Unfortunately, you are going to have to stay, because I have about five more questions. So you are stuck with me.

CHAIR: We look forward to that!

Senator WILLIAMS: Who is handling the complaints from the honey industry in Australia?

Mr Sims : This gentleman is but I am across the issues as well.

Senator WILLIAMS: This is a really serious issue, Mr Sims. The brand Victoria Honey is imported from Turkey. When tested in Germany, Victoria Honey was found not to be honey and was most likely maize sugar syrup. You say that because ACCC says it because it was not an Australian laboratory that the results cannot be accepted. Another product from Turkey, Hi Honey, is being sold in Australia but has been found not to be honey. Again, complaints were lodged with you. Other products such as Sunshine Honey and Hechem Honey are from the same source in Turkey. This has been going on from a couple of years. I think the beekeepers in Australia are getting done over big time by false and misleading labelling and products being allowed into this country when the competition is wrong. Can you update me on what is happening with the complaints lodged by the Australian Honey Bee Industry Council about important products from Turkey having misleading labels?

Mr Sims : Yes, I can. I will give it my best shot and see whether Mr Gregson wants to add anything. It is a very important issue. We take these credence type issues very seriously. We have done a lot of work on country of origin, whether the product is what it specifies it is. It is a very important geographical area.

Senator XENOPHON: Or a map of Australia, as I think Hi Honey has.

Mr Sims : We got this complaint over a year ago and we have been investigating it. We have had testing done and we have been consulted with the parties. We are very close to an enforcement outcome on it, but we will try and position that—

Senator WILLIAMS: How do you define 'very close', Mr Sims, because it has been taking some time and these people are bleeding as a result of this misleading import of products.

CHAIR: Senator Williams, let the witness answer.

Mr Sims : We have to do testing we have to get evidence. I will get Mr Gregson to answer that precise question, but we want to come up with a solution that applies to all those makers that you mentioned.

Senator WILLIAMS: Mr Gregson, how far away are we?

Mr Gregson : To answer your question about how close we are, I would expect that the ACCC would be in a position to announce an enforcement outcome in this matter in the next two to three weeks.

Senator WILLIAMS: Wonderful. That answers it well. Good luck with it.

Mr Sims : I probably should have got him to answer it straightaway!

Senator WILLIAMS: You should have. We would have saved time.

Mr Sims : I could have saved myself a lot of time and angst.

Senator WILLIAMS: I don't mind taking up time, because we don't want to go back to Senator Conroy.

I want to take you to the sugar industry. You will remember this, Senator Conroy. The 1912 royal commission by the Commonwealth government expressed concerns about the imbalance in market power in the Australian sugar industry. This gave rise to the introduction of a system that recognised growers' rights and ensured the cane growers and mill owners share in the risk and rewards from the raw sugar. Wilmar is a leading merchandiser of consumer brands in sugar and sweetener products in Australia. Wilmar's withdrawal from QSL, Queensland Sugar Ltd, comes with a statement that 'growers do not have any legal or contractual rights.' This is a clear signal that Wilmar is intent on exercising its regional mill monopoly powers to advance its own interests above those of the growers and appears to fly in the face of Australian competition law. What is the ACCC doing to ensure growers' rights are protected from this monopoly action?

Mr Sims : Good question, Senator.

Senator WILLIAMS: These are on behalf of Senator O'Sullivan, actually.

Mr Sims : It is a sector I am quite familiar with. I understand the sugar industry very well and I understand the background to the issue as you describe it. We got a letter from the cane growers I think about three or four weeks ago. I am meeting with representatives from them, I think next week, up in Brisbane. We are going to talk that issue through. So we are looking at it. What we will have to get to the bottom of is how it works in the act and to what extent it is a policy question. We understand the complexity of it and we are taking it very seriously.

Senator WILLIAMS: Good, because Wilmar is 16 per cent owned by ADM, the Archer Daniels Midland company that wants to take over—

Mr Sims : They are a Singapore based company.

Senator WILLIAMS: By withdrawing approximately two million tonnes of sugar from Queensland Sugar Ltd, Wilmar is exercising its regional mill monopoly power to substantially damage or eliminate QSL as a competitor and is engaging in anticompetitive behaviour to deny growers' rights, preventing growers from exploring the competitive offerings of the others. What remedies does the Competition and Consumer Act 2010 provide to curtail this behaviour?

Mr Sims : It is a complex issue. We are going to have to get right on top of it. I know the background to the industry very well and I know it is a very complex issue. At this early stage I cannot say more, but it will not be an easy one, because it has a mix, as I say, of policy, legislation, breach of the act. We have looked at very closely and we will.

Senator WILLIAMS: Senator O'Sullivan says here that by guaranteeing to beat the QSL price by $3 per tonne wouldn't Wilmar be engaging in predatory pricing? If they are saying they are guaranteeing to beat it, then that will surely be something you look at. Good luck with that.

My final question is on your action with Coles. I must commend you, Mr Sims, on some of the actions you have taken off late—the shopper dockets. You have done very well and I do commend you for your good work. Have Coles been cooperative? I am talking here about 200 suppliers in what appears to be very heavy-handed demands, if I can put it that way, from Coles. How is that progressing?

Mr Sims : We have a broader investigation which is continuing. In terms of the specific matters relating to the ARC action, that is before the court. Coles have said they will vigorously defend their position, so I imagine we will have a fairly long, drawn-out court process, as we usually do in these very complex hard-fought matters.

Senator WILLIAMS: Would you rather leave questions on this issue aside, given that it is in front of the courts. Perhaps we should.

Mr Sims : In terms of that particular matter, I have probably said about all I can say.

Senator WILLIAMS: I think we will leave it at that. Good luck with it. That is all the questions I have, Chair.

Senator MADIGAN: In November last year I asked whether the ACCC was aware of any examples of engineered wood products that do not reach Australian standards which have been found on the Australian market and whether or not they have specifically been referred to the ACCC. I got the response that the ACCC had received complaints regarding two matters, I believe. Have any other matters come to light since then and in all cases have there been any investigations and, if so, what were the results of any of these investigations conducted?

Have there been any penalties applied, alerts or public statements? If so, in what form? And, if not, why not?

Mr Sims : On the very first thing you said, in relation to what products—engineered building products?

Senator MADIGAN: Engineered wood products such as formplies—laminated formplies.

Mr Sims : I will pass to Nigel Ridgway, who looks after this area. We are about product safety. Building standards are done by other regulators. We look at things like how the product safety standards affect consumers. We are looking at a lot of those issues at the moment—probably more than we would like to look at. But in terms of the foundation-type building standards, that really belongs to another—

Senator MADIGAN: No, this is about product safety.

Mr Sims : But it depends what—

Senator MADIGAN: Mr Sims, if a formply delaminates on a job and you have got concrete suspended on it, that is a safety issue. If there is formaldehyde in a formply or a composite timber board, that is a health and safety issue. I want to know if you have had reports, what you are doing about them and if you have issued fines for non-compliance with the Australian standards.

Mr Sims : I will pass over to Mr Ridgway, if I could.

Mr Ridgway : The ACCC's safe product work involves a range of remedies. One of the largest elements of our product safety regime in Australia is what I would refer to as the defective goods regime—that is, in the event that a supplier or a regulator identifies a good that they apprehend may lead to serious injury or illness of a consumer, they then have a mechanism to go about alerting the government to that issue and to take responsible action to remove that product from the marketplace. The ACCC has a number of these recall negotiations that occur over a period of time. Since our last appearance, there have been one or two electrical products that have been identified as having raised concerns. Those products are primarily regulated by the electrical safety regulators—

Senator MADIGAN: I am talking about timber products, Mr Ridgway. That is what I want to know about. Have you specifically investigated any claims of products that do not reach Australian standards? I do not want to know about light switches.

Mr Sims : I do not think, subject to Nigel's view, that we have had any reports of mandatory incidents in relation to timber products meeting the timber standards. My understanding is that that is something the building regulators would look at. It is not our role. Our role would come in if there was injury as a result of those things. I do not think we have had any.

Senator MADIGAN: Can I just clarify this now? I would like direction as to who enforces compliance with the regulations where, for instance, if we have a composite board that is being used for the fabrication of, say, a vanity unit. I know of a case in Melbourne, not far from Senator Ryan's electorate office, where a product has been used which has formaldehyde in it. I know that many people working on that site are bleeding from the nose. These people want to know who it is that they go to see to get this situation dealt with because every time they go to get something done, everybody passes the buck. Some people say it is the ACCC. Some people say it is somebody else. These people go on this bloody merry-go-round and people's health is being unaffected.

CHAIR: Order. I understand your passion but—

Senator XENOPHON: 'Bloody' is all right, Chair!

CHAIR: Not in here, it's not.

Unidentified speaker: It's not the Queen's English, is it, Chair?

Senator MADIGAN: Well, they have got a bloody nose.

Mr Ridgway : If I could try to assist. In looking at the regulatory framework in relation to building and construction products, my team has identified that there is, of course, a role carried by state regulators; there is also a role, in some circumstances, carried by local government in its certification regime. Further to that, in the regime that responds to the building code of Australia's framework, there are some private certifiers who have a role as well.

Unidentified speaker: I think that is probably making your point.

Mr Gregson : If I could clarify something: earlier you referred to matters that had come to the attention of the ACCC in relation to formply. They were considered by the ACCC in the context of representations made, and whether those representations about compliance with various standards was misleading. The more recent one of those that you have referred to in that question on notice was considered by the ACCC. There were changes made and indeed any residual issues were addressed, at least in some part, by communications from the trader to customers, but also a referral from the ACCC to the relevant state worksafe authority. I would have thought one of the worksafe authorities could well have a strong interest if there are risks in a workplace.

Senator Ryan: Senator Madigan, I appreciate this is no longer my portfolio, but were you referring to staff or customers in an area when you mentioned that people were ill? Was that workers on a site, for example?

Senator MADIGAN: Yes, tradesmen dealing with these products. It is not one instance but multiple instances of people bleeding from the nose because of exposure.

Senator Ryan: Just to clarify: this was product being used and sold business to business for use in construction and staff falling ill? Could I suggest—to help Senator Madigan, in that environment, because that is different to a sale to a consumer—that the commission take on notice what courses of action not just a business might have from purchasing a faulty product or a product that was a risk, but also staff, or potentially future customers if it was a retail area, might have. So a series of steps or something in writing from the ACCC that Senator Madigan could have that they could wave in another regulator's face and say, if they say it was not them, 'No, this is what we've been told', so that the buck cannot be passed. I will endeavour to get back to you on a couple of the matters privately, Senator Madigan, now that you have said that.

Senator MADIGAN: Are the ACCC aware of the November 2013 report by the Australian Industry Group, The quest for a level playing field: the non-conforming buildingproductsdilemma, which outlines the safety concerns for instance about formply, amongst other products, when they do not conform with Australian standards and the extensive evidence that the report provides of this. Further to that, is the ACCC resourced, or is it in your charter, to enforce Australian standards?

Mr Sims : Nigel, I was going to say I did not think it was in terms of building standards.

Mr Ridgway : That is correct. The ACCC does not have authority to enforce Australian standards. It has a responsibility—as my colleague Scott Gregson has identified, where there are representations about Australian standards in the supply chain, in the market, in trade or in commerce, then the Australian consumer law expects those representations to be correct.

Mr Sims : What we spend a lot of time on is dealing with product safety issues, whether it is chemicals in bed sheets or cables in houses. We are seeing a lot of low-priced imported goods being sold in retail outlets that do concern us from a product safety point of view. We are the product safety regulator. If someone has an injury with a good, they have to report it to us. We get involved in the recalls, and if we feel people are not adhering to that regime we can take enforcement action. We do put a lot of time into this. The building standards per se are the building regulator's responsibility. But as Senator Ryan said, we will get back to you; we will try to be as helpful as we can about who should be doing what in this area.

Senator MADIGAN: Can you clarify for me: you have acknowledged that there are a lot of goods coming into the country that are substandard—what I refer to as landfill. So you only act on that; you are not proactive, you are just reactive to this product. Is that correct? Senator Conroy made the comment when we were talking about the broadband, that if a company purports to have a service that is 100 units to a consumer, and he suggested that it is only 38, that you say that is misleading the consumer. There are so many products coming into the country, Mr Sims, that people in good faith are buying, assuming that those products meet our standards. So you are saying to me that the ACCC is not proactive in looking at products coming into the country as to whether they meet what the community's expectations are—

Mr Sims : That is right, Senator. We do not have a role that is standing at the border and checking whether the goods meet international standards. What we do have a role in is if somebody says—

Senator MADIGAN: No, I am talking about Australian standards.

Mr Sims : If someone says, 'our good meets Australian standards' and it does not, that is misleading conduct; we can take action. If somebody is selling a good that is unsafe, we can take action—and we are very proactive on that. We have testing regimes, and we have, as I say, a mandatory reporting system where we find out about any injuries with goods. So in terms of consumer product safety, we spend a lot of time on that, Senator.

Senator MADIGAN: Would you be able to give me a road map, so I can give it to people? I have got a multitude of these complaints.

Mr Sims : Yes. As I have said, we most certainly will.

Senator WHISH-WILSON: I have a question in relation to the ACCC's case against Coles for unconscionable conduct. Mr Sims, you made a statement on 7.30 in an interview, when they asked you a question about the voluntary code of conduct between supermarkets and suppliers, and whether that should be adequate to capture these types of infringements, or potential infringements, and you said no, that was not the case. Was that something specific to this particular legal action? Or are you of the view—with COTA—that the voluntary code of conduct should be made a mandatory code?

Mr Sims : The difference between voluntary and mandatory is voluntary, they can opt out; mandatory, they can't. We have a bigger concern, which is that the code allows for changes in contract terms midway through a contract, if the supplier agrees. And so our worry is that the supplier could be pressured to contract out of what the code is trying to protect. That is our biggest concern with the code.

Senator WHISH-WILSON: Okay. But you are still part of that code though, is that correct? My understanding of the draft agreement that I saw is that there was still a role for the ACCC in the voluntary code, as it stands now.

Mr Sims : Sorry; I have had a problem hearing. But if I understand correctly: the Treasury are running the code process and we are providing input into this, but it is very much their process.

Senator WHISH-WILSON: Thank you for that. I have a couple of questions on the carbon price repeal that is coming to the Senate in a few months. What sort of work has the ACCC already done to determine pass-through of savings, in the event that the carbon price repeal is legislated?

Mr Sims : We have done quite a lot of work, Senator. We have been liaising, particularly with the electricity industry because that is the very high profile industry here—that is where the main effect of the carbon price was; we are doing a lot of work with the gas industry as well, and the other big industry that was affected was synthetic gases. We are also talking to the landfill people, and a range of others. So we have at the moment a monitoring role. We are using that to collect the information so that if the tax were to be repealed we would be able to make sure that the cost savings are passed on.

Senator WHISH-WILSON: I understand some industries were able to pass on savings and others were not.

Mr Sims : That is right.

Senator WHISH-WILSON: So have you already determined a whole list of different products, or an industry breakdown of who did and who did not increase prices?

Mr Sims : In high-level terms we have. When the tax came in there were, in a sense, two classes of companies. The trade-exposed emissions-intensive industries got more or less close to over 90 per cent compensation; because they were trade exposed, they could not pass on the price increase. So when the tax is repealed there will not be any price reduction in those. That is well understood and that is why they got the compensation. But there are a whole range of other industries where the price reduction will come about, and that is where we are focusing our attention.

Senator WHISH-WILSON: But that is primarily electricity, gas and synthetic gasses.

Mr Sims : Those are the main ones.

Senator WHISH-WILSON: And landfill.

Mr Sims : And landfill. There are a couple of others, but those are the main ones.

Senator WHISH-WILSON: AiG recently did a survey of businesses in the manufacturing, service and construction sector and they found that only six per cent of their carbon costs were passed on. Is that roughly in line with the sort of work you have been doing?

Mr Sims : At a high level, yes, because most of the companies who got the compensation were trade-exposed emissions-intensive. They were in the manufacturing sector, which is exactly the AiG's base. Their particular manufacturing base got compensated because it was well understood that they could not pass it on.

Senator WHISH-WILSON: Broadly speaking, across most industries in the economy we should not see any significant changes in prices based on the carbon repeal?

Mr Sims : The main focus is going to be electricity, gas and those synthetic gasses. We would expect large reductions in those areas and modest reductions on a broad scale, because electricity is part of manufacturing costs. To take the extreme example—aluminium—about 30 per cent of its cost is electricity; cement is about five or 10 per cent; and most other manufacturing products are up to five per cent, so they will have a small benefit out of that.

Senator WHISH-WILSON: I think the survey also found that 51 per cent of businesses were not able to pass on the higher costs from the carbon price. I would be interested in whether they would even reduce their prices in the first place, because they have already taken—

Mr Sims : It very much depends if they are trade exposed. If they are trade exposed the price is set by import parity. As I say, that is why they got compensation the first time around.

Senator WHISH-WILSON: Do you have a formula for separating the component related to the carbon price versus other factors that have led to significant rises in electricity prices over time?

Mr Sims : Yes, pretty well.

Senator WHISH-WILSON: And you will be compelling a reduction at that level?

Mr Sims : We will have the powers to do that. The law says that once the law is passed and the tax is not there they cannot have a carbon component in their pricing. We are pretty confident we are on top of what that is and what the reductions are going to be.

Senator WHISH-WILSON: I have a general question—we always ask you this—on whether you think the Competition and Consumer Act needs to be amended in relation to your case around unconscionable conduct. Senator Xenophon is looking at me; he probably has a similar question.

Senator XENOPHON: No, not at the moment.

Senator WHISH-WILSON: Have you made a submission to the root and branch review?

Mr Sims : We will put a submission into the root and branch review in the next few weeks, and that will fully describe our views on the microeconomic reform angles and also the changes that we believe need to be made to the act. We think unconscionable conduct provisions largely work well. We use them quite a lot. We are reasonably comfortable with those. But we will be putting in a detailed submission, and it will be public.

Senator WHISH-WILSON: Thank you. That is it for me, Chair.

Senator XENOPHON: My terseness is a function of time, not temperament. Firstly, in relation to the complaint about honey, where there is a map of Australia behind it and it is 100 per cent imported, on notice can you advise whether the ACCC will set out protocols or guidelines to fast-track these complaints about what most consumers would see as completely misleading behaviour? The honey producers who contacted me felt frustrated by the process. Can you take that on notice?

Mr Sims : I am happy to take that on notice.

Senator XENOPHON: It is an important issue.

Mr Sims : It is an important issue.

Senator XENOPHON: In relation to the extensive work the ACCC has done on the Active Retail Collaboration program, are investigations continuing?

Mr Sims : That program is before the court.

Senator XENOPHON: Has the investigation been completed in terms of the supply chain or are you still—

Mr Sims : The investigation in terms of the relationship and treatment of suppliers by supermarkets is continuing. The aspect related to the ARC program is the matter that has been completed and is before the court.

Senator XENOPHON: So proceedings have been instituted against Coles but that does not mean that there will not necessarily be proceedings instituted against anyone else as a result of this process you have been involved with some time.

Mr Sims : We are still investigating and there still may be further matters in relation to the general relationship between supermarkets and their suppliers.

Senator XENOPHON: Can I just go to the issue of the milk industry, the dollar price war. I think it was your first back in October 2011—

Mr Sims : I started on 1 October 2011 and the milk issue had been running a few months before I joined.

Senator XENOPHON: And it was your first hearing in respect of that. One of the issues asked was whether the ACCC has looked at the impact that the milk price wars and that deep discounting has had on the dairy industry in general in terms of whether there was predatory or unconscionable behaviour. Can you take that on notice when you have had a chance to look at how the dairy industry in Australia looks since that milk price war?

Mr Sims : We have looked at whether it was predatory and we decided that there was no purpose element. We did not think it matched the unconscionable hurdle. We have to look at that sort of behaviour very much against the act.

Senator XENOPHON: Finally, there is an issue where we seem to agree to disagree concerning price-sharing arrangements in the retail petrol industry. I just note that the UK Office of Fair Trading last year said, 'It is not possible for everyone to change where they buy fuel, but planning fuel purchases in advance and making use of information that is available through a number of websites and mobile phone apps can help save money.' You may be familiar with the work of Dr Michael Noel from the Edgeworth Economics who suggested that informed consumers in Canada could save around four per cent by timing their purchases. You might also be familiar with the work of Dr David Byrne, Gordon Leslie and Roger Ware back in August 2013 on how consumers respond to gasoline price cycles. The work that they have done says there are cost-savings for consumers and reductions in market power among firms if they encourage purchasing strategies that see consumers buy fuel at the bottom of the cycle. What is the ACCC doing to encourage such services for consumers including the ACCC's own website, the MotorMouth app and website and others? Do you acknowledge that research indicates that the more information there is out there for consumers, the more it actually empowers consumers to try to form a more competitive marketplace.

Mr Sims : Absolutely. We have a website where we try to point a lot of this out. We completely accept that the more information consumers have the better. I might just make a couple of points though, because it is a very important issue. The information-sharing arrangements, the activities, as they work at the moment, which is information-sharing in relation to the petrol retailers, would not be legal in most other jurisdictions overseas. That is why we are looking at it here.

Senator XENOPHON: But if it was shared amongst consumers—

Mr Sims : In Germany, what they do—just to pick up that point, Senator—is require the petrol companies to make the information available to consumers, but that information is not allowed to go to the petrol retailers. That is, the petrol companies each bring information into a central source. That central source makes it available to consumers but not to the petrol retailers—

Senator XENOPHON: They will find out about it eventually if it goes to consumers.

Mr Sims : But the problem we are concerned about is that every 15 or 30 minutes as the information comes in the competitors can look at what other competitors are doing. Consumers are not getting a look in. This is a service for the competitors, the petrol retailers, and that is our concern.

Senator XENOPHON: Again, if I can direct you to what the UK Office of the Fair Trading said about making use of information websites and phone apps that can save money. My final question in respect of this is: what is the ACCC doing to crack down on misleading apps that are out there, which appear with poor or no data, that could be seen to be a rip-off of motorists? In other words, has the ACCC received complaints about such apps? I understand that there are some apps out there that are misleading. I would like to know whether you have received any complaints and whether you will be investigating those complaints about those apps that purport to give information to consumers but in fact—colloquially—rip them off.

Mr Sims : I am not aware that we have had complaints—

Senator XENOPHON: You could take that on notice.

Mr Sims : I am happy to take it on notice. We do crack down on services that give information to consumers that is misleading. We have done that with energy websites where people go to see where the cheapest price is but are redirected to the company that is paying for that website. So we will look out for that but, again, our concern with information-sharing as it goes on at the moment is that is information being shared only amongst competitors.

Senator XENOPHON: Can you on notice respond to the concerns I have raised in terms of what Dr Michael Noel, David Byrne, Gordon Leslie and Roger Ware have said in their research—the UK Office of Fair Trading? It seems that this is one area where the ACCC's position—and I am not being critical—is at odds with what economists and consumer bodies are saying.

Mr Sims : We will take it on notice. I will just say that we have no problem with consumers getting access to information. That is not what this investigation is about; it is about information-sharing amongst competitors. The information is not going to consumers, except with a lag twice a day. The information we are worried about is going to competitors.

Senator XENOPHON: If there was full disclosure to consumers at the same time, would that go a long way in allaying your concerns?

Mr Sims : Our concern is with information-sharing amongst competitors. I would imagine we would probably still have that concern—just as the Germans have made sure the information does not go to the competitors. Our concern is the real-time information to competitors, where I can see immediately whether you are following the price I just put up and so forth. As I say, what goes on in Australia would be illegal in most jurisdictions in the world.

Senator XENOPHON: If you can take those questions on notice, that would be great.

Mr Sims : We will certainly look at that and get back to you. It is a very important issue and we take it very seriously.

Senator CONROY: When you considered the special access undertaking by NBN Co, were access seekers concerned about the ACCC's ability to ensure that costs included in the regulatory asset base, or RAB, were reasonably incurred?

Mr Sims : Yes, access seekers were concerned about that. That is a common thing that we find in these types of agreements.

Senator CONROY: So when NBN Co changes the technology mix employed in the NBN, will the ACCC expect NBN Co to submit a revised SAU to reflect the changes to the RAB?

Mr Sims : We will certainly be in discussion with them about that. It really depends on where it lands. We already have provisions in the NBN SAU that allow a certain flexibility during the build stage, and that may well accommodate the change in technology. Otherwise, will have to have a look at it.

Senator CONROY: Has the ACCC ever expressed concern about Telstra's costing methodology for use in determining regulated access prices?

Mr Sims : All the time. That is a constant to and fro with Telstra—and with every other regulated entity we deal with.

Senator CONROY: I expected that to be the answer. What if NBN Co was to agree to a cost-plus contract with Telstra for access to the copper and/or HFC networks?

Mr Sims : We look at these things.

Senator CONROY: Would the ACCC be expected to evaluate the costing methodology used by Telstra in determining the cost base for a cost-plus contract?

Mr Sims : We would look at these things.

Senator CONROY: I mean, you couldn't not do that. If you look at the example between Australian Water Holdings and Sydney Water, where costs were not properly scrutinised—and that led to the wholesale corruption we see in New South Wales—that is where that one got to.

Mr Sims : I am not sure it is an actual parallel. I would point out that, in the access undertaking that NBN Co have with us now, we have taken a fairly broad view during the build phase. So if we were consistent with that, you would have to question how much they would need to come in. We always have this issue as to how much you look at these things. We are much better place during operations—

Senator CONROY: But if NBN Co and Telstra do a deal that is cost-plus 20 per cent, 10 per cent or five per cent, the ACCC would have to be looking at that sort of arrangement.

Mr Sims : NBN Co put out a lot of contracts to build the NBN. We have not pored over those contracts.

Senator CONROY: Not one of them is a cost-plus contract—not one!

Mr Sims : We will see what wanders over the horizon and see how we go.

Senator CONROY: I am assuming the ACCC would need to investigate the economic justification for the mark-up—the plus component in such an agreement—in the context of the NBN Co's RAB.

Mr Sims : As I say, we have got a current access agreement and we will have to see what comes out of the discussion.

Senator CONROY: Just to be very clear, NBN Co's previous management absolutely would not enter into cost-plus contracts. Every single supplier wanted a cost plus but they did not enter into them. So if they are going to change their position, particularly with a gorilla like Telstra, what an access seeker will want to know is whether or not the ACCC will be looking at writing to the RAB.

Mr Sims : I understand what the access seekers will want. We will have to see what evolves.

CHAIR: Thank you very much to the ACCC for assisting us today. It is much appreciated.

Proceedings suspended from 12:45 to 13:46