Telkom’s arbitrage
TELKOM has long made a habit of using every litigious tactic to frustrate efforts by its rivals to subject it to scrutiny by SA’s competition authorities. Now the high court has helped its efforts along, by ruling that the competition tribunal cannot hear a complaint lodged by internet service providers as long ago as 2002.
The decision is bad news for the SA Value Added Service Providers’ Association, which brought the case, complaining that Telkom was abusing its market dominance. It is, in a way, even worse news for the Competition Commission, whose technical errors in prosecuting the complaint provided the high court with grounds to rule in Telkom’s favour.
The good news, ironically, is that the technicalities were the reason for the decision — the high court did not make a finding on the big issue, which is about who has jurisdiction over competition matters in the telecoms industry: the competition authorities or Independent Communications Authority (Icasa).
That leaves the way open for the Competition Commission to continue investigating 11 more complaints against Telkom.
But the fact that the jurisdictional issue remains unresolved is a problem. As long as it is, Telkom will reasonably continue playing jurisdictional arbitrage games in the courts in a bid to avoid competition scrutiny. When it does land in the competition courts, as when it tried to buy Business Connexion, it tends to find itself in trouble. Yet Icasa has not proved particularly effective at curbing Telkom’s market power and subjecting it to competitive markets.
So as long as the uncertainty about who is in charge of competition issues in the industry remains, it will be hard for rivals to contest markets in which Telkom is a dominant player and prices in those markets are likely to stay higher than they should be.
The new draft competition legislation tries to solve the problem by simply putting the competition authorities in charge, whatever Icasa says. That could be the answer. But it could well prove controversial within the government.
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