Telkom loses court case, paving way for mega fines - TechCentral

Telkom loses court case, paving way for mega fines

Telkom loses appeal caseThe supreme court of appeal in Bloemfontein has dealt a big blow to Telkom, opening the way for the telecommunications operator to fined as much as R7bn for alleged anti-competitive abuses.

The court has ruled in favour of the Competition Commission, which had appealed an earlier judgment by the high court in Telkom’s favour. The commission lost the high court battle, not on merit, but rather as a result of procedural errors it made.

The case related to a seven-year-old complaint against Telkom at the commission, brought by the SA Vans Association. The 2002 Sava complaint 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 commission then appealed against the high court’s decision to the supreme court of appeal. That case was heard on 3 November, and judgment was handed down today (Friday).

The supreme court has ordered Telkom to pay costs.

The judgment comes barely a month after the Competition Commission referred a separate matter to the Competition Tribunal. That case, in which it stands accused of abusing its dominance in the Internet market, could result in a fine of as much as R3,5bn (in practice it is likely to be a lot less).

Telkom had been hoping for a victory at the supreme court of appeal as this would have undermined the ability of the competition authorities to probe the company and enforce fines against it. The operator has long argued that the commission has no jurisdiction over the telecoms industry and that it is solely regulated by the Independent Communications Authority of SA.

The operator says it won’t comment on the appeal court’s judgment until it has had a chance to study it. “Telkom is considering its options in view of the court’s decision,” says Anton Klopper, group executive for legal services.

At 1pm on Friday, Telkom’s share price was trading down 2,6%.  — Duncan McLeod, TechCentral

Download the judgment (Microsoft Word file)

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