The Competition Tribunal heard closing arguments this week in the Competition Commission’s case against Telkom. The tribunal now has to decide whether the company is to be fined and, if so, what sort of penalty is fitting.
If the tribunal imposes a hefty sentence, Telkom has a number of legal options that could still see the process drawn out for several more years.
Desmond Rudman, a partner at law firm Webber Wentzel and head of its competition practice group, says the first port of call for Telkom, should the tribunal rule against it, will probably be the competition appeals court which is the first court in the competition authority’s structure.
“The commission acts as investigator and prosecutor,” Rudman explains. “It’s similar to the police and prosecutors in the criminal justice system: it collects evidence and prosecutes the matter before the tribunal”.
The tribunal doesn’t have the status of a court but is rather intended as a “forum where the Competition Commission can prosecute matters and parties can defend themselves, which is meant to allow for a credible and transparent decision”.
Part of the high court, the competition appeals court is a specialist division and will be the first place Telkom will go if it decides to appeal against the tribunal’s decision or the quantum of the penalty it imposes.
“Telkom will probably do both,” says Rudman.
Telkom senior council Alfred Cockrell suggested in his statement to the tribunal on Wednesday that the scale of the proposed fine might even make it unconstitutional.
Rudman suggests this move may be because Telkom is “teeing up for a constitutional challenge as well. If [Telkom] can find a constitutional peg to hang it on, it could potentially take the matter to the constitutional court”.
Assuming the tribunal rules against Telkom — and unless it imposes a nominal or symbolic fine — it appears unlikely the company will let the matter go uncontested, particularly in light of the way it’s approached the matter to date. Already, it’s challenged the authority of the competition authorities to consider the matter (it lost that case at the supreme court of appeal).
Rudman says simply getting through an appeal will take several months. If this is unsuccessful, it may be possible for Telkom to turn to the supreme court of appeal, either through the Competition Appeals Court or through a direct petition to the supreme court.
“One also needs to factor in the publicity that comes from the battle,” says Rudman. “There’s a cost to continuing to fight, albeit it an indirect cost, particularly given the fact that – as suggested by Telkom – the market has changed.”
Telkom may wish to rehabilitate rather than further tarnish its image, he says.
Interestingly, should Telkom exhaust all avenues of appeal, the value-added network service providers that originally brought the case may have the option of pursuing the company for damages.
Rudman says it’s important to remember that the penalty proposed by the commission doesn’t address this possibility and isn’t meant to reimburse those companies that say they suffered because of Telkom’s alleged anticompetitive behaviour.
Potentially, the company could see itself hit with a hefty fine, only to be followed by further claims for damages. However, no court will entertain any damages claims before the final decision in the current case is reached.
Keith Weeks, head of enforcement and exemptions at the Competition Commission, says Telkom — like any party with a matter before the tribunal — can appeal the tribunal’s decision with the competition appeal court and that, “if history is anything to go by”, the company will take the matter further.
He says any attempt to further appeal to the supreme court of appeal can only be challenged on areas of administrative law that have been breached.
Even if Telkom does appeal, Weeks says the process shouldn’t be excessively long. He says neither the competition appeal court nor the supreme court of appeal would take that long to process the matter, and that although this might equate to “another couple of years” before the matter is settled, Telkom “will eventually run out of avenues”.
Like Rudman, Weeks thinks Telkom will consider just how long it remains worthwhile to fight the matter should the tribunal find in the commission’s favour.
Asked whether the tribunal would consider imposing a nominal or symbolic fine — the approach sought by Telkom if it’s found guilty — Weeks says the tribunal is unable to take this approach.
“The penalty can’t be nominal,” he says. “It must be substantial for it to be effective. The tribunal will consider proportionality, but it needs to remain credible and it’s not credible to levy a nominal fine for a serious contravention.” — Craig Wilson, TechCentral
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