The ACCC is concerned that executives of telco giants Telstra, Optus and Vodafone are reducing competition by telling the market in advance about their plans to reduce smartphone subsidies, according to reports in the Australian Financial Review (AFR).
The practice of disclosing future pricing information to competitors is known as price signalling and is currently illegal only in the banking industry.
According to the AFR, senior executives at the telcos have all commented on the trend of falling subsidies for their smartphone plans and the result for an Apple iPhone 5 is an extra burden to consumers of $400 over the lifetime of a contract. Both Vodafone and Optus have remarked favourably on falling subsidies and increased handset prices as Optus reported a 15% increase in net profits in the 2014 financial year despite losing subscribers.
The Harper Review
Former ACCC chairman Allan Fels is quoted in the AFR as saying “The telcos would be closer to the line on illegal behaviour with European tests” and called for the Harper Review into competition policy to consider adopting international rules. The Competition Policy Review currently underway will be considering whether to extend the price signalling laws to sectors other than banking.