ZTE’s local partner to fight Competition Commission’s collusion penalty

THE South African operation of Chinese telecommunications equipment supplier ZTE will challenge the Competition Commission’s decision to recommend a fine of 10% of its annual turnover for collusion.

Last week, the commission said ZTE SA and ZTE Mzanzi’s conduct of allocating customers between themselves violated the Competition Act.

During its investigation, the Competition Commission found that the pair had reached an agreement in 2011 to allocate customers between themselves.

This meant ZTE SA and ZTE Mzanzi would not market and supply telecommunications equipment and network solutions outside their designated or allocated customers.

ZTE Mzanzi was formed by ZTE SA and black-owned entity 8Mile. ZTE Mzanzi was focused on the public sector, while ZTE SA targeted the private sector.

At the time of the contravention, ZTE SA and ZTE Mzanzi were distributors of telecommunications equipment and network solutions that included equipment used by network operators and equipment used to access networks.

The firms also provide core routing, core network equipment and solutions.

ZTE also recently launched a range of smartphones.

ZTE SA said on Friday it was “surprised to find the commission has elected to refer the matter to the Competition Tribunal”. It said it had “openly and transparently assisted the commis- sion through its investigation”.

ZTE SA said it was taking the commission’s referral to the Competition Tribunal “very seriously” and together with its legal team, had begun the process of assessing the referral to determine the best way forward.

“ZTE is confident of its ability to successfully defend the alle- gations against it and intends on doing so at the Competition Tribunal,” the company said.

It added that legal compliance was a core part of its business, and that it “intends on making use of due legal process to advance its case and protect its reputation”.

The commission said last week customers of ZTE’s telecommunications and networking equipment included Telkom, Broadband Infraco as well as Sentech.

The equipment distributed by ZTE SA and ZTE Mzanzi was manufactured and supplied by ZTE Corporations of China.