There's a right old ding-dong Down Under after incumbent telco Telstra was accused of anti-competitive behaviour.

It all kicked off after the telco cut the price of its retail broadband product without offering a similar cut to its wholesale service.

Australia's competition watchdog, the ACCC has since intervened stating that based on the on the information available to date, "it has reason to believe that Telstra has engaged in anti-competitive conduct".

If found guilty Telstra could face fines of more than AUS$10m (£4m).

Last week, the ACCC slapped Telstra with a consultation notice, part of the watchdog's investigation into the alleged anti-competition.

At the time, Telstra accused the ACCC of "interfering" insisting that it would deal directly with its wholesale customers to resolve the matter.

Senior Telstra exec Bill Scales went on the attack saying that regulatory intervention from the ACCC would make it more difficult for Telstra to respond to wholesale customers' concerns.

"By imposing itself on a very competitive market, the ACCC would put at risk the tremendous benefits consumers are enjoying," said Scales.

"Precipitous regulatory intervention would add legal complexity to our wholesale relationships, which would make it harder and slower for us to deal with our wholesale customers," he said.

But many ISPs have spoken out in favour of the action with some warning that they will be forced out of business if Telstra is allowed to continue unchecked.

Primus Telecommunications - Australia's fourth largest fixed-line telecoms carrier with more than 500,000 Internet punters - is one of those operators that has spoken out about Telstra.

Its accused Telstra of doing "irreparable damage to competition in the industry" and supports the ACCC's bid to "encourage a level playing filed and prevent Telstra from using its dominant market position to limit competition for consumers".

Yesterday, Telstra handed the ACCC its response to the price squeezing allegations. The competition watchdog is now considering Telstra's submission. ®