ARCHIVED - Telecom Order CRTC 97-1096
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Telecom Order |
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Ottawa, 11 August 1997
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Telecom Order CRTC 97-1096
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The Commission stated in section VI.B of Review of Intercorporate Transactions Policies, Rules and Procedures, Telecom Decision CRTC 97-5, 21 March 1997 (Decision 97-5), that it was of the preliminary view that for the 1996 fiscal year onwards the annual external audit of the established pricing principles for purchases by Bell Canada (Bell) from Northern Telecom Canada Limited (NTCL) (most favoured customer clause) should be replaced by an annual certification signed by Bell's Chief Financial Officer.
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File No.: 96-2035
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1. Parties were given 30 days from the date of Decision 97-5 to file comments.
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2. Comments were received from AT&T Canada Long Distance Services Company (AT&T Canada LDS) dated 21 April 1997. AT&T Canada LDS argued that the proposed alteration to the audit requirements provides Bell with a strong incentive and greater opportunity to behave in an anti-competitive manner. AT&T Canada LDS submitted that until such time as the Commission ceases regulating Bell on a rate base rate-of-return basis, the annual audit should continue to be filed and, that at a minimum, Bell should file an external audit report for 1996 and 1997.
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3. Bell responded on 2 May 1997 and submitted that with a price cap regime imminent, equipment purchases from NTCL, a company with a significant minority shareholder interest, at prices higher than "most favoured customer" pricing, would be of no benefit to itself and that it has no incentive to inflate its rate base.
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4. The Commission notes that at paragraph 236 of Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997, the Commission decided that beginning with the year 1998, the directions of Decision 97-5 section VI.B would no longer apply. Consequently, the basis for AT&T Canada LDS' comments relate to 1996 and 1997 only.
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5. Given that Decision 97-5 was not released until March 1997, the Commission considers that the proposed certification process could not possibly have influenced Bell with respect to 1996.
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6. The Commission also agrees with Bell that with a price cap regime imminent, Bell does not have an incentive to inflate its rate base by purchasing equipment from NTCL at prices higher than those resulting from the most favoured customer clause.
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7. The Commission is not persuaded by AT&T Canada LDS' arguments. The Commission hereby confirms its preliminary view that Bell's annual external audit of purchases from NTCL should be replaced by an annual certification signed by Bell Canada's Chief Financial Officer for the 1996 fiscal year onwards.
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Laura M. Talbot-Allan
Secretary General |
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