Commission will appeal Telkom fine
TELKOM once again faces the possibility of a R3 billion fine from the competition authorities.
The Competition Commission lodged a cross-appeal yesterday against Telkom’s recent appeal of the R449 million fine levied by the Competition Tribunal, in which the watchdog raised the spectre of a R3bn fine.
The commission’s decision adds to growing difficulties at Telkom, which is the subject of an inter-ministerial investigation and which earlier this week announced that its chairman, Lazarus Zim, was resigning.
In its notice of cross-appeal the commission argued that the tribunal erred in its findings and that the tribunal erred in fixing the penalty at R449m.
“The tribunal should have fixed the penalty at a materially higher level; the appropriate level, the commission contends, is [about] R3bn.”
Dominic Cull of the Internet Service Providers’ Association, which brought the original complaint to the commission back in the 1990s, welcomed the commission’s decision to cross-appeal. He said the most important part of the tribunal’s finding was the precedent it established, which helped to restrain the behaviour of powerful vertically integrated incumbents such as Telkom, more than the size of the fine.
“It is really important that a precedent is established. Although this case relates to Telkom’s behaviour between 1999 and 2004, it is accurate to say that Telkom is still behaving in this manner.”
Yesterday Telkom acknowledged the commission’s crossappeal and said that it “is fully within [the commission’s] rights to cross-appeal those aspects of the tribunal’s ruling it does not agree with”.
It is not known whether the commission would have appealed the tribunal’s fine if Telkom had not launched its own appeal but Telkom’s action appears to have persuaded the commission to pursue a vigorous challenge to the tribunal’s ruling. In particular, the commission seems determined to secure a charge of excessive pricing and price discrimination against Telkom.
Although allegations of excessive pricing and price discrimination were included in the commission’s case against Telkom, the tribunal did not make a finding on them. Instead it only found that Telkom had refused to give competitors access to an essential facility and had induced its customers not to deal with its competitors.
In its notice of cross-appeal, the commission stated that it had presented sufficient evidence to support its charges of price discrimination and excessive pricing and that the tribunal had erred in not finding against Telkom on these counts.
A finding of price discrimination and excessive pricing would justify a much higher penalty. The commission is hoping that the Competition Appeal Court will find in its favour and increase the R449m penalty to closer to R3bn.
The commission also argued in its cross-appeal that there were no mitigating factors to justify reducing the tribunal’s fine. Telkom shares rose 0.55 percent to R18.18 yesterday.