Industry furious as Telkom gets off R3,7bn fine

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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TELKOM has avoided a punishing R3,7bn fine for anticompetitive behaviour after the high court ruled that the Competition Commission cannot refer a complaint against the operator to the Competition Tribunal.

The decision by the Pretoria High Court on Friday is a blow to the internet industry, which hoped to see Telkom punished for practices that have stifled the sector for years.

Telkom won on technicalities stemming from mistakes made by the commission. The court did not rule on the crucial question of whether the competition authorities have the power to slap down Telkom for illegal practices, or whether that duty lies with the Independent Communications Authority of SA (Icasa).

“We are going to appeal the verdict,” said commissioner Shan Ramburuth. The lack of clarity meant the commission would continue to investigate another 11 complaints against Telkom that industry players have lodged.

The case was begun in 2002 by companies, including internet service providers (ISPs), offering voice and data services. They accused Telkom of using illegal tactics to quash rival ISPs, including cross-subsidies, charging them more for bandwidth than it charged its own internet division, and refusing to supply some ISPs any bandwidth at all. The commission agreed and proposed the R3,7bn fine, and referred the case to the tribunal for approval.

Telkom then went to court, claiming the commission had no jurisdiction in a sector regulated by Icasa.

Telkom argued that the evidence against it was biased, since it was supplied by a research centre that consulted people who worked for companies making the complaint.

Telkom said the commission had been too late to refer the complaint to the tribunal, as it had to act within one year.

The court agreed that Telkom had reasonable grounds to fear the evidence was biased. It also ruled that the delay in referring the case and failing to get all parties to allow more time were fatal flaws.

Ramburuth said the appeal would be on the grounds that the expert evidence it presented was not biased. Telkom’s legal services executive Anton Klopper said the verdict vindicated its decision to fight the case.

The commission’s failure to get all parties to allow more time arose because some complainants had gone out of business, said Ant Brooks of the Internet Service Providers’ Association of SA. “Telkom dragged its heels in providing evidence so it was very clever of its lawyers.”

But the scrutiny had forced Telkom to end some anti-competitive practices. “It’s not been a total loss,” Brooks said.

Telkom anti-competitive discussion