THE Competition Tribunal has imposed a fine of R449m on Telkom for abusing its dominance in the telecommunications market between 1999 and 2004, a period in which Telkom was a monopoly provider of telecommunications facilities.
The tribunal said on Tuesday that Telkom leveraged its upstream monopoly in the facilities market to the advantage of its own subsidiary in the competitive value-added network market. Half of the penalty is to be paid within six months of the tribunal’s decision while the balance is payable within 12 months thereafter.
During the hearing before the tribunal, the Competition Commission asked the tribunal to impose an administrative penalty of R3,5bn. The commission wanted the fine to act as a deterrent for excessive pricing by other dominant companies.
The commission asked for an additional fine of R1bn for Telkom’s refusal to give a competitor access to an essential facility.
Telkom said the fine proposed by the commission was a "jaw-dropping, inappropriate fine", and should it be found guilty, the appropriate fine for the two complaints before the tribunal should rather be R26,8m.
The case against Telkom started in 2002, when providers of value-added network services (Vans) accused Telkom of exclusionary conduct and price discrimination. More than 20 companies, including Internet Solutions, and the South African Value-added Network Services Association complained to the commission about Telkom’s conduct.
The case was referred to the tribunal in 2004 but hearings began only at the end of last year after several challenges to the competition authorities’ jurisdiction.
The service providers alleged that Telkom was denying them access to telecommunications infrastructure that would enable them to offer clients value-added services such as e-mail, internet access, protocol conversions and video conferencing.
The commission’s referral followed its investigation and conclusion that Telkom was abusing its dominance by charging excessive prices, refusing access to an essential facility and engaging in price discrimination, thereby making its rivals, the Vans, less competitive in the telecommunications market.
Telkom denied the allegations, saying the regulatory environment at the time allowed it to protect its exclusive rights through contractual restrictions to service providers.