Telkom fined for ‘unjust’ monopoly practices

Telecommunications service provider Telkom South Africa has been fined R449 million(US$61,184,426.84) for monopoly practices in the country.

The Competition Tribunal Board imposed the charges yesterday against the cellular company for the practices conducted between 1999 and 2004.
The case dates back to February 2004 when the competition commission referred the company to the Tribunal after South Africa Vans Association (SAVA) and 20 other internet service providers (ISPs) lodged a complaint.
Telkom’s effort to challenge the case was rejected in 2009 by Supreme Court of Appeal after which it was referred back to the Tribunals.
From October 2011 to February 2012, the Tribunal held hearings comprising12 factual and expert witnesses who presented evidence on behalf of either sides, Telkom and the Commission.
The commission accused Telkom for refusing to supply important access facilities to independent Value Added Network Services (VANS) providers while at the same time forcing its customers not to deal with them directly, as well as hiking surplus prices for services.

Telkom accepted the allegation but retaliated by saying that it was rational for them to do so as the VANS providers were involved in illegal conduct.
It further said that VANS service providers used a business model that didn’t adhere with Telkom’s exclusivity rights as authorized by Telecommunications and there was no legal monopoly.
Tribunal discovered that the mobile service provider refused to supply necessary facilities to VANS in addition to restraining their customers from dealing with them.
According to the Tribunal, Telkom’s conduct was unfair as it minimized competition from other competitors in the market.
In a statement, the Tribunal said the company used unfair reason by stating that VANS was in the business illegally and affecting the rivalry’s network, interfering with its development and innovation.
The Tribunal concluded that Telkom’s own regulatory department misinterpreted the law by responding on the perception illegal performance of VANS providers in “a choosy and illogical manner.”
Telkom South Africa was fined R499 million for monopoly. Within six months, half of the penalty must be paid while the remaining balance be settled within 12 months after the initial payment.

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