Where Telkom’s fine millions go

Telkom has been slapped with a R449m fine by the Competition Tribunal for past anticompetitive behaviour. But where does this money go and what will it be used for? By Craig Wilson.

The Competition Tribunal last week fined Telkom R449m for abusing its dominance in the telecommunications industry between 1999 and 2004. Assuming Telkom doesn’t appeal against the decision, half of the penalty is to be paid within six months of the tribunal’s decision, with the balance is payable within 12 months thereafter.

Half a billion rand is a lot of money. The question is, where does it all end up?

According to section 59(4) of the Competition Act, the fine must go to the national revenue fund. National treasury is responsible for administering this fund.

The fund is simply government’s consolidated account and is also the destination for anything collected by the SA Revenue Service or any government agency.

A national treasury spokesman says SA doesn’t have a ring-fenced approach to the collection of funds and that “all moneys from government agencies” go into the national revenue fund. The fund covers all government spending — that is, everything in the national budget. National treasury releases monthly statements concerning its income and expenditure.

What this means there is no way to tell what Telkom’s fine will actually be spent on once it has been paid into the fiscus. Likewise, by way of example, the fuel levy is also paid into the national revenue fund but is necessarily spent on transport-related projects.

Telkom can still appeal against the Competition Tribunal’s ruling, and will probably do so given its track record in the case. It can start by turning to the competition appeals court to appeal against either the decision, or the scale of any fine imposed upon it, or both.

Already, the fixed-line operator has challenged the jurisdiction of the Competition Commission. Telkom lost that case at the supreme court of appeal in Bloemfontein.
If Telkom is unsuccessful before the competition appeals court it could return to the supreme court to contest the tribunal’s decision.

With a market capitalisation of R9bn, the fine imposed on Telkom amounts to about 5% of its current value. However, it’s still considerably less than the penalty the operator could have faced. Originally there were calls to fine Telkom 10% of its 2003 turnover — or around R3,5bn.  — (c) 2012 NewsCentral Media

• Image: Images of Money