The Competition Commission is arguing that its higher body, the Competition Tribunal, erred when it dismissed aspects of a case that was brought against Telkom.
The commission has filed an appeal against the finding with the Competition Appeal Court, arguing that parts of its argument against Telkom were not considered during hearings.
Last month, the Competition Tribunal fined fixed-line operator Telkom R449 million for abusing its monopoly between 1999 and 2004, in what was the first competition decision to be handed down against the telecoms group.
The case stems from a complaint submitted by the then South African Value-Added Network Services (SAVA) group and 20 other Internet service providers to the commission in 2002 around alleged price fixing and Telkom's alleged refusal to provide access to essential facilities.
The providers accused the fixed-line operator of abusing its market dominance by refusing to supply them with backbone and access facilities, unless they met Telkom's conditions. SAVA was subsequently incorporated into the Communications Users' Association of SA, which later disbanded.
The tribunal found Telkom had refused to supply essential facilities, which limited competition in the sector. It did not find enough evidence to support an excessive pricing argument. Telkom has said it will appeal the decision.
Erroneous ruling
This week, the commission filed a “cross-appeal” in the Competition Appeal Court, citing Telkom as a respondent. In its notice, it argues that the tribunal erred in only finding against Telkom in one aspect of its case and in not taking all the evidence into account.
Competition commissioner Shan Ramburuth says the tribunal only found against Telkom in the access refusal part of its case, and did not take all the evidence and arguments around excessive pricing and price discrimination into account.
According to the notice, the commission argues that the tribunal erred in fixing the penalty at R449 million and it should have fined Telkom at a “materially higher level”, which it says is in the order of R3 billion.
The commission had wanted Telkom to be fined the maximum penalty of R3.5 billion, equivalent to 10% of Telkom's 2003 revenue, for alleged price fixing. It asked, as an alternative, for a fine of R1.1168 billion for the alleged refusal to provide essential facilities.
Telkom submitted that, if a fine is imposed, it should be no more than R20.5 million for the alleged excessive pricing complaint, and R6.8 million for the essential facilities matter.
The fixed-line operator says: “Telkom has received the Competition Commission's notice of cross-appeal in the SAVA matter and has taken note thereof. The Competition Commission is fully within its rights to cross-appeal those aspects of the tribunal's ruling it does not agree with. The matter will now proceed to a hearing of the appeal and cross-appeal by the competition appeal court in the ordinary course.”
Dominic Cull, regulatory advisor for the Internet Service Providers' Association, believes the commission's appeal is an appropriate and correct course of action in the light of the need for a clear precedent relating to anti-competitive conduct in the sector.
The tribunal, as a rule, does not comment when its decisions are appealed.
Telkom also faces another referral from the commission, which was filed with the tribunal in 2009 and has yet to be heard. The full judgment handed down last month in the 2004 referral is available on the tribunal's Web site.
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