R3 billion Telkom fine fair: Competition Commission appeal

The Competition Commission has filed a cross appeal against a portion of the Competition Tribunal’s decision in the case between Telkom and the South African Value added Networks Services.

In August, the Competition Tribunal imposed a penalty of R449 million on Telkom for abusing its dominance in the telecommunications market between 1999 and 2004.

Telkom announced in late August that it will appeal against the tribunal’s ruling, effectively fighting the R449 million fine which the company has to pay.

The Competition Commission has now hit back by filing its own legal papers on 11 September 2012, cross-appealing a portion of the tribunal’s ruling.

“Competition Commission (‘the Commission’) hereby cross appeals against that portion of the decision of the Tribunal, dated 7 August 2012, in which the Commission’s claims against Telkom based on a contravention of ss 8(a), 8(c) and 9 of the Competition Act were dismissed,” the legal document reads.

According to the Competition Commission, the tribunal erred in its ruling that:

  • No conclusion on equivalence was required since the Commission had failed to make out a case on harm;
  • The harm pleaded by the Commission arising out of the differential was confined to consumers;
  • No proof of harm (specifically net harm) to consumers was tendered by the Commission;
  • Accordingly, the Commission had failed to make out a case under s 9, and consequently, no penalty could be imposed for this contravention.

The Competition Commission further argued that the tribunal should have found that Telkom was guilty of excessive pricing and price discrimination over the period examined in the trial.

The Commission concluded that the tribunal should have fixed the penalty at a materially higher level [than the R449 million penalty Telkom received], saying that the appropriate level is to the order of R3 billion.

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R3 billion Telkom fine fair: Competition Commission appeal