D-day for Telkom in competition case

The Competition Tribunal will on Tuesday deliver its long-awaited ruling concerning Telkom’s alleged past anticompetitive practices. By Craig Wilson.

After more than eight years of investigation, Telkom’s day of reckoning has arrived. The Competition Tribunal will on Tuesday rule on allegations of anticompetitive behaviour by the incumbent fixed-line operator.

If found guilty, the tribunal could impose a fine on the company of more than R1bn.

The case was originally brought by a number of Telkom’s rivals, which accused the company of abusing its dominant position and keeping rivals out of the market.

The Competition Commission has recommended to the tribunal that it impose a fine of nearly R1,2bn against the company. This is less than the maximum R3,5bn fine analysts said it could have asked the tribunal to impose.

Telkom, meanwhile, wants a fine of only R20,5m imposed on it, which equates to less than 2% of the penalty the commission wants, claiming that a severe penalty could cripple it.

Telkom has argued that it was granted certain privileges by government when it was privatised, including the power to prevent value-added network service providers from delivering some services. Many argue that Telkom’s actions not only hampered growth and competition in SA telecommunications but also discouraged foreign investment.

In February, Desmond Rudman, a partner at law firm Webber Wentzel and head of its competition practice, told TechCentral that if the tribunal were to impose a hefty sentence, Telkom had a number of legal options at its disposal that if pursued could result in the process being drawn out for several more years.

Telkom could begin by turning to the competition appeals court to appeal against either the decision, or the scale of any fine imposed upon it, or both.

Assuming the tribunal rules against Telkom — and unless it imposes a nominal or symbolic fine — it appears unlikely the company will let the matter go uncontested, particularly in light of the way it’s approached the matter to date.

Already, it’s challenged the jurisdiction of the competition authorities to consider the matter. Telkom lost that case at the supreme court of appeal in Bloemfontein.

The company could also return to the supreme court of appeal if the competition appeals court doesn’t offer it the outcome it seeks.

Rudman said Telkom might also consider the negative publicity it could attract by continuing to exhaust all avenues of appeal, particularly as the company is actively looking to rehabilitate its public image.  — (c) 2012 NewsCentral Media