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ZTE SA, ZTE Mzanzi accused of collusion

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 29 Apr 2016
ZTE SA is surprised the commission elected to refer the matter to the tribunal, but is taking the referral "very seriously".
ZTE SA is surprised the commission elected to refer the matter to the tribunal, but is taking the referral "very seriously".

A complaint of alleged collusion, between ZTE Corporation South Africa (ZTE SA) and ZTE Mzanzi, has been referred by the Competition Commission to the Competition Tribunal.

The commission says it has been investigating the alleged contravention of the Competition Act since 2013 and has now referred the matter up the chain to the tribunal. As part of this referral, the commission has asked the tribunal to impose an administrative penalty equal to 10% of each firm's turnover.

The commission says in a statement that ZTE SA and ZTE Mzanzi were, at the time of the contravention, distributors of telecommunications equipment and network solutions, which include equipment used by network operators and equipment used to access networks.

The commission says their customers are in the public and private sectors, and include Telkom, Broadband Infraco, Sentech, etc. The telecommunications equipment distributed by ZTE SA and ZTE Mzanzi is manufactured and supplied by ZTE Corporation China.

The commission's investigation found ZTE SA and ZTE Mzanzi "agreed to allocate customers between themselves". The commission says this agreement was reached in 2011 and meant ZTE SA and ZTE Mzanzi would not market and supply telecommunications equipment and network solutions outside their designated or allocated customers.

"The commission is of the view that both companies' conduct contravenes section 4(1)(b) of the Competition Act, hence its decision to refer the complaint to the tribunal for adjudication."

ZTE SA "surprised"

ZTE SA told ITWeb via e-mail that it was "surprised to find the commission has elected to refer the matter to the Competition Tribunal". The company, which is a subsidiary of ZTE Hong Kong, says it has been aware of the commission's investigation since 2013 and has "transparently assisted the commission through its investigation".

"ZTE is taking the commission's referral to the Competition Tribunal very seriously. In doing so, ZTE have already met with its legal team and have begun the process of assessing the referral to determine the best way forward."

The company says legal compliance is a core part of its business and it "intends on making use of due legal process to advance its case and protect its reputation".

"ZTE is confident of its ability to successfully defend the allegations against it and intends on doing so at the Competition Tribunal."

ZTE Corporation China is a global provider of handset devices and telecommunications equipment. The company has operations in 160 countries around the world, including SA. ZTE was founded in 1985 and is listed on both the Hong Kong and Shenzhen Stock Exchanges, and is China's largest listed telecoms equipment company.

ZTE Mzanzi is a local ICT firm which is 60% owned by South Africans and 40% owned by ZTE Corporation China. It started trading in January 2011.

ITWeb was unable to reach ZTE Mzanzi for comment by the time of publication.

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