Primus Telecommunications Inc. today expressed outrage at a decision by Australia"s competition watchdog, the Australian Competition and Consumer Commission (ACCC) to fine Telstra A$6.5 million (US$5.1 million).

Telstra has agreed to fork out the money in compensation for its wholesale customers to help end a year-long clash over cut-price Internet broadband prices.

The ACCC issued a competition notice against Telstra last March after the telco slashed broadband prices for its retail customers to A$29.95 a month. But the price cuts did not apply to Telstra"s wholesale clients, who claimed they still had to pay A$36 a month to access Telstra"s network.

Primus Telecom regulatory affairs manager, Ian Slattery, said the compensation figure wouldn"t deter anti-competitive conduct by Telstra and was the equivalent of a "parking fine".

"Given the damage that Telstra"s conduct caused the industry as it reaped outstanding benefits, the A$6.5 million Telstra now has to pay could be characterized as an excellent investment," Slattery said.

"This demonstrates the failure of the telecommunications competition regime and the need for its urgent rehabilitation before Telstra is unleashed as a fully privatized entity," he said.

In fact Telstra"s head of regulatory affairs Bill Scales agreed the A$6.5 million worth of rebates was a small price to pay, but insisted Telstra had never tried to act in an anti-competitive way.

In addition to the fine Telstra has promised to provide up to 15 days notice of future price cuts.

Telstra"s decision to lower prices for wholesale customers last month also helped resolve the situation.

ACCC chairman Graeme Samuel said Telstra acknowledged its cut-price offerings made in February 2004 adversely affected its broadband customers which is why Telstra has offered reduced pricing, and rebates.

IT Minister Helen Coonan said resolution of the dispute proved current regulatory arrangements work.

As a result of the resolution reached between the ACCC and Telstra, the watchdog will not ask the Federal Court to enforce the competition notice that was issued against the telco.

Had it been enforced, Telstra could have been fined A$10 million for each contravention of the notice and A$1 million for every day it continued.