Document ID: chunk:federal_register_of_legislation:F2017L01112:body:0:p13
Version: federal_register_of_legislation:F2017L01112
Segment Type: other
Provision Reference: 
Character Range: 31614–34375

about the date on which negotiations began, the parties should consider evidencing negotiations in writing.

3.2.5 Interest
For backdating to act as a control on the incentive for delay, the ACCC believes the backdated payment should include an interest component. This is expressly permitted by s. 44ZO(6). Where backdating provides a mechanism for the adjustment of monies from the access provider back to the access seeker (in the case of overpayments), the ACCC considers that the inclusion of an interest component as part of that re-adjustment is appropriate.. This should also apply in the case of underpayments made by the access seeker to the access provider whereby an interest component should also be included in the re-adjustment of monies between the parties.
If the ACCC backdates a determination and orders one party to pay money to the other with respect to the backdating period, it will generally also provide for the payment of interest on the backdated amount. In this regard, the ACCC proposes to adopt the following methodology for the calculation of interest:
    * Interest will be calculated on the amounts of money that have been overpaid (or underpaid).
    * These amounts usually will be calculated by reference to the volume of services supplied by the access provider to the access seeker over the backdating period and to the charges that the ACCC considers should have applied in respect of those services.
    * The backdating period is the period between the date on which backdating commences and the date on which the determination takes effect.
    * The rate of interest will be applied to those amounts from the date on which the overpayments (or underpayments) were made.

Rate of interest
If backdating of a determination is to have its intended effect—which is to lessen incentives on the access provider to delay the arbitration process—then the parties should be placed, to the greatest extent possible, in the position they would be in had the arbitrated price applied from the outset. Awarding interest is not intended to operate as a sanction or penalty on the party required to pay the money. The rate of interest should therefore reflect the opportunity cost of the overpayment—that is, the opportunities that the person making the payment has foregone by being deprived of the overpaid amount. This may be influenced by:
    * the best alternative use available to the person making the overpayment—for instance the person making the overpayment may have instead preferred to use the money to reduce their overdraft or to finance new investment.
    * the risk of not being repaid in the event that the person to whom the overpayment was made becomes insolvent.
Similar principles would also apply to the case