Access to essential infrastructure

To facilitate effective competition in some markets, it may be necessary to ensure businesses can access the services of certain infrastructure owned and operated by others. Such infrastructure - often referred to as `bottleneck facilities’ - includes:

• electricity grids;
• telecommunication networks;
• rail tracks;
• gas pipelines; and
• ports and airports.

Bottleneck facilities can be inefficient to duplicate, and access to these facilities on reasonable terms and conditions may be vital for competition to occur in related markets.

National Competition Policy (NCP) established the National Access Regime (Part IIIA of the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974 ) and clause 6 of the Competition Principles Agreement) as a legal avenue for potential market entrants to access bottleneck facilities.

For example, effective competition in the electricity supply market may require that generators and distributors have access to the electricity transmission network.

Where the owner of this facility is not competing in downstream or upstream markets, it will usually have little incentive to deny access, although, it may charge higher prices than if it was operating in a more competitive market. An access regime can be used to restrain prices in these circumstances.

Where the owner is competing in downstream or upstream markets, it has an incentive to restrict access to the facility and charge monopoly prices for that limited access. The prospect of such behaviour may be sufficient to deter entry to, or limit vigorous competition in, these markets. An access regime can address these issues.

The National Access Regime outlines three pathways for a third party to seek access to essential infrastructure if agreement cannot be reached through commercial negotiation:

• Declaration: An access seeker applies to the National Competition Council (NCC) to have the service provided by a facility declared. The NCC makes a recommendation to the relevant Minister. If declaration occurs, the third party acquires the right to negotiate access with the provider, and where this negotiation fails, to have their request resolved through a binding arbitration by the Australian Competition and Consumer Commission (ACCC).

• Undertaking: The facility owner may voluntarily submit to an undertaking setting out terms and conditions for access to be approved by the ACCC.

• Certification: The relevant state or territory introduces an access regime and seeks a recommendation from the NCC that the access regime be certified as effective.

The ACCC , the Australian Energy Regulator (AER) and the Essential Services Commission (ESC) have roles in oversight of access regimes.

The ESC oversees the access regimes for declared rail freight services. The ACCC oversees access arrangements for interstate rail, while the AER oversees the access arrangements for electricity and gas transmission and distribution.

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