The Competition Tribunal will spend up to three days next week hearing closing arguments in the case between Telkom and the Competition Commission over allegations the operator abused its monopoly position, in the process harming competition in the sector.
The hearings took place in October 2011, following a process that started in 2004 when Telkom was accused of abusing its position and keeping rival players out of the market.
Telkom stands accused of anticompetitive behaviour, including exclusionary pricing practices, limiting value-added network service (Vans) providers’ ability to provide services to customers, and knowingly hampering competition in the telecoms sector.
The commission wants the tribunal to impose a fine of 10% of Telkom’s 2003 revenue — a sum in excess of R3,5bn — for the alleged abuses. It’s the maximum fine the tribunal may impose.
Telkom has argued that its business practices at the time were a result of obligations it had to government. It has also argued that the practices under scrutiny no longer occur.
The case was originally meant to be heard in 2004, but was delayed after Telkom challenged the commission’s jurisdiction in the supreme court of appeal — a challenge it eventually lost.
One of the issues being scrutinised by the competition authorities is that Telkom refused to supply essential services to Vans providers making it impossible for them to expand their customer bases. It has been argued that Telkom also went to great lengths to induce customers to deal with it rather than its competitors.
Many argue that Telkom’s actions not only hampered growth and competition in SA telecoms but also discouraged foreign investment.
Telkom can ill afford a substantial fine — it is in a far more precarious position financially than it was when the alleged abuses took place. However, the tribunal does not typically impose the maximum allowable fine. Telkom, of course, will be hoping no fine is imposed at all.
Closing arguments have been set aside for Monday, Tuesday and Wednesday next week. It’s not yet known when the tribunal will rule in the case. — Craig Wilson, TechCentral
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