The Australian Competition and Consumer Commission (ACCC) issued a notice to Telstra last night claiming the carrier acted anti-competitively in its implemention of a wholesale line rental price increase on its "Home Access" product in December.
The so-called "Part A competition notice" allows third-parties to take legal action to recover loss or damages resulting from an anti-competitive activity.
Those affected by the December price change applauded the ACCC's move.
"The ACCC has acted appropriately in issuing the competition notice against Telstra," a spokesperson from the nation's second-largest telco Optus said in an e-mailed statement.
"Telstra needs to be called to account for its intimidating behaviour and Telstra's new management must learn what the rules in Australia are."
The Competitive Carrier's Coalition (CCC), a group representing tier-two carriers Macquarie Telecom, PowerTel, Primus, iiNet, Hutchison Telecoms, TransACT and Agile Communications agreed.
"The ACCC was to be congratulated for standing up to Telstra's bullying tactics and anti-competitive behaviour by issuing a competition notice today," the CCC said in a statement issued last night.
"It is crucial that the ACCC now act quickly to follow up today's move by taking court action to have Telstra fined for its behaviour," CCC executive director David Forman said in the statement.
iiNet's general manager of regulatory affairs Steve Dalby told ZDNet Australia in a telephone interview today his company was cooperating with the ACCC on the issue.
"We've been involved with discussions with the ACCC since around around Christmas I guess, when Telstra made that change to its pricing structure," he said. "We'll continue to help them with their enquiries."
However Telstra said its December price increase was "fair and justified", and the issue was not as simple as it appeared.
Telstra's group manager of regulatory affairs Dr Tony Warren said competitors commonly used the Home Access product as just one component of a larger bundle of services to customers.
"Over the bundle there is sufficient margin," Telstra's statement said.
"The ACCC contends there are competition issues in the Home Access charge because access in itself is not profitable," said Warren.
"It's like saying a sandwich shop should profit on every ingredient used in a salad sandwich when common sense says only the overall margin matters."
"The ACCC's decision to issue a competition notice is not a finding of guilt, nor does it imply the matter will automatically be adjudicated by a court," pointed out Warren.
"However, Telstra is prepared to strongly defend its position," he added.