How Telkom could escape competition fines - TechCentral

How Telkom could escape competition fines

Anton Klopper

Telkom is hoping the supreme court of appeal in Bloemfontein will throw it a lifeline next week. A court ruling in the telecommunications operator’s favour could mean it escaping having to fork over what could amount to billions of rand in fines for alleged anticompetitive behaviour.

Telkom stands accused of abusing its dominance in the Internet market. The Competition Commission this week referred complaints brought by Verizon Business (now MTN Business), Internet Solutions and MWeb to the Competition Commission and recommended the imposition of a fine equal to 10% of Telkom annual turnover, or about R3,5bn.

But the commission’s referral could come to nothing if the supreme court finds in the operator’s favour and rules that the Competition Commission has no jurisdiction over the telecoms industry.

Telkom has long maintained that it falls under the jurisdictional control of the Independent Communications Authority of SA (Icasa).

The case that the supreme court of appeal must now hear relates to a seven-year-old complaint against Telkom at the Competition Commission, brought by the SA Vans Association (Sava). The 2002 Sava complaint also led to the commission recommending that the tribunal impose a fine of 10% of Telkom’s annual revenues, amounting to about R3,7bn at the time.

But before the tribunal could consider the referral, Telkom took the commission to the high court to ask a judge to determine whether it had jurisdiction in the matter. The court found in Telkom’s favour, but only because of procedural errors made by the commission.

The commission then appealed against the high court’s decision to the supreme court of appeal. That case will finally be heard next Tuesday, 3 November.

Anton Klopper (pictured), group executive for legal services at Telkom, says he expects the appeals court to hand down judgment fairly quickly, probably within the next month. “All the parties have already filed their heads of argument,” he says.

A ruling in Telkom’s favour could jeopardise the commission’s investigations into the company. However, a ruling against Telkom could pave the way for it to face two mega-fines. In theory, the company could be forced to fork over R7,2bn in fines; in practice, the fines will be much less.

It’s not at all clear which way the court will rule. The matter is highly complex, and made more so by changes in legislation, regulation and licensing since the complaints were first filed.

If Telkom is eventually fined, Kloppers says the company will not receive the maximum fine recommended by the commission. The fine, if there is one, should be equal to no more than 10% of the turnover of Telkom’s Internet service provider business.

Complainants react
Complainants to the Competition Commission have generally welcomed the decision to refer the matter to the tribunal for adjudication.

MTN Business says in a statement that it is “looking forward to a swift resolution of these complaints before the tribunal as this has been a protracted process spanning many years”.

Derek Wilcocks, MD of Internet Solutions, has described the commission’s decision as an “important step” in the process. He says Telkom has rectified some of its business practices but says Internet Solutions still has areas of concern. These relate mainly to the fixed-line broadband market. “We are keen to get the broadband issues resolved.”

MWeb CEO Rudi Jansen declines to comment citing the “sensitivity” of the matter.  — Duncan McLeod, TechCentral

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