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Telstra deals ACCC final blow in competition fight

A legal battle between the ACCC and Telstra has concluded today following a Federal Court ruling that a 2006 competition notice served by the watchdog is illegal.

A legal battle between the ACCC and Telstra has concluded today, following a Federal Court ruling that a 2006 competition notice served by the watchdog is illegal.

The ACCC had appealed to the court to have the notice -- which allowed rivals to take legal action against Telstra -- rewritten, to ensure its legality.

Following the ruling, Telstra labelled the 18-month legal wrangle "a waste of time and money" and called for the ACCC's powers to be amended.

Telstra group counsel Will Irving said in a statement: "Despite the ACCC trying to torture the law to save face, the Court has ruled the ACCC has not met the legal requirements of procedural fairness and confirmed it does have an obligation to afford procedural fairness in the exercise of its powers, and that the court will not fix the ACCC's mistakes."

The ACCC served the competition notice in April 2006 after it alleged a price increase resulted in Telstra's retail prices for the line rental component -- for the majority of its fixed voice products -- being below its wholesale price for line rental.

Although the ACCC revoked the notice in March 2007, Telstra had already begun a course of legal action, which culminated in a legal victory for Telstra when the Federal Court declared the competition notice illegal.

Today's Federal Court decision rejected an appeal by the ACCC to have the court rewrite the notice to make it legal, Telstra said.

"As we said in April, the ACCC's powers should be overhauled given the finding of the Court that the ACCC had not treated Telstra fairly. The ACCC's competition notice exposed Telstra to potential fines of up to $3 million a day, as well as third-party litigation of precisely the type we saw from Optus," Telstra's Irving added.

Optus launched legal action against Telstra in May 2006, seeking damages as a result of the competition notice, although the suit was later dismissed.