Telkom fined R449-million for uncompetitive behaviour
South Africa’s Competition Tribunal has placed a fine of R449-million on South Africa’s fixed-line operator Telkom, for uncompetitive behaviour between 1999 and 2004. After the fine was imposed, shares in Telkom dropped by 3.38% to R17.44 a share on the Johannesburg Stock Exchange.
The court case against Telkom was initially brought on by the Competition Commission, and asked the Tribunal to fine Telkom a whopping R3.5-billion – or 10% of the group’s earnings.
According to the Tribunal, “Telkom leveraged its upstream monopoly in the facilities market to advantage its own subsidiary in the competitive value added network market…Telkom’s conduct caused harm to both competitors and consumers alike and impeded competition and innovation in the dynamic VANS market.”
“Through this conduct, the commission alleged, Telkom sought to expand its exclusivity to services over which, in law, it did not enjoy a monopoly. Moreover, through the use of these contractual terms, Telkom sought to bypass the regulator, which was entrusted with enforcement of the Telecommunications Act, in order to obtain for itself the additional protection of private law remedies,” the Tribunal said in a statement.
They also added that Telkom bullied its competitors. “Telkom had chosen to respond to the claimed illegal conduct of the Vans providers in a selective and inconsistent way. While Telkom bullied its downstream competitors into line, it exploited, to its advantage, the very alleged grey area in the regulatory framework by integrating voice and data and bypassing the regulator’s requirement of separate accounting for PSTS and Vans services, the tribunal stated in its judgment. Accordingly the Tribunal found no merit in Telkom’s illegality defence,” they concluded.
Half of the R449-million fine is to be paid by Telkom within the next six months, while the other half is payable in the next year after the first half has been paid.