South Africa - Telkom and competition law

Telkom could face fine of R5-billion

The telecommunications industry will have to wait several weeks before learning what the outcome will be of Telkom’s case against the Competition Commission.

The state-owned fixed-line operator last week took the commission to the Pretoria High Court for referring a case of anti- competitive practice to the Competition Tribunal.

Telkom’s argument was systematically dismantled on Friday as the commission brought its side of the story to court. It was the second day of a two-day hearing.

Telkom filed a complaint with the High Court in 2004. It argued that at the time, while the Telecommunications Act was in effect, any matter that concerned its conduct was under the jurisdiction of the Independent Communications Authority of South Africa.

Martin Brassey, the commission’s advocate, conceded that some of Telkom’s arguments made on the previous day were valid, but he urged the court to consider that the matter was more of a competition issue rather than a mere telecommunications case.

Brassey said: “In order to decide to what extent the conduct has been entrusted to Icasa, we must look at the conduct itself.

‘‘Telkom’s contracts stated that Telkom obliges Value Added Network Service providers to supply contracts that create limitations on their abilities to provide services.”

He said that the contracts which Telkom muscled smaller operators into were designed to limit the source of service providers so that they would use only Telkom’s services.

This was more than just a telecommunications issue, but one of competition at large.

“This case would have been better decided by the tribunal (which was better resourced) which has proper comprehension of the true facts,” Brassey added.

Marc Furman, head of legal services at Internet Solutions, said: “Telkom is still involved in anticompetitive behaviour, and we hope that the tribunal will eventually implement a wholesale pricing regime.

Telkom currently faces a fine of up to R3-billion, but if the complaints are revisited by the commission, it could face a fine of 10 percent of its R51.6-billion revenue.