TELKOM received a discount on its penalty for anti-competitive behaviour as its conduct stemmed from uncertainty in the telecommunications regulatory framework and conflicting government objectives at the time, said Trudi Makhaya, advocacy and stakeholder manager at the Competition Commission.
She said the case illustrated "the importance of the consistent application of competition policy across government". No entity should conclude that its anti-competitive behaviour would be tolerated, Ms Makhaya said.
"This decision should also serve to remind sector-specific regulatory institutions of the importance of safe-guarding competition in the execution of their mandate," she said.
The Competition Tribunal on Tuesday fined Telkom R449m for anti-competitive conduct in the period from 1999 to 2004. Telkom’s monopoly ended in May 2002 but was delayed until 2005 when its competitor Neotel got its license.
The commission proposed a fine of R3,2bn or 10% of Telkom’s annual turnover for 2010-11. The tribunal calculated the fine on less than 2% of the turnover, amounting to R449m.
Ms Makhya said the commission was not primarily concerned with maximising penalties, but in achieving pro-competitive outcomes in the economy. "Regulatory reform, in the form of liberalisation and privatisation in the telecommunications sector in South Africa, as in many other countries, did not automatically lead to increased competition. This case demonstrates the importance of effective economic regulation after such reforms."
She said given that the telecommunications market, characterised by vertical integration and the control of essential upstream inputs by former state-owned monopolies, the commission will continue to monitor this sector to ensure that market conduct leads to pro-competitive outcomes in a critical sector of the economy.
Chris Charter, director at law firm Cliffe Dekker Hofmeyr, said the tribunal’s observations regarding the role that state shareholding played in exacerbating anti-competitive behaviour by Telkom is "chilling" in the face of recent reports that Telkom may be nationalised.
"It is creating an even stronger conflict of interest in a market where Telkom is still a very important service provider to a strategic industry", he said.
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