The Competition Commission is keen to see its most recent case against Telkom proceed to the Competition Tribunal.
The authority has also welcomed a decision made by the Supreme Court of Appeal (SCA) last week that will allow it to proceed with the competition hearing against Telkom.
“The commission's comment is that we are keen to proceed with the case on the merits, therefore, we welcomed the SCA's decision,” says the commission's head of strategy and stakeholder relations, Nandi Mokoena.
However, the authority is not convinced the fixed-line giant won't try to drum up some other legal action to prevent the case from going through to the tribunal. “Unless Telkom raises any further matters outside the competition courts, the next step is for the litigation before the Competition Tribunal to proceed on the merits,” adds Mokoena.
The ruling by the SCA last week essentially saw Telkom's refusal to accept the jurisdiction of the competition authorities scrapped, clearing up an issue that has plagued the industry for years.
The fixed-line operator last year used the jurisdictional confusion to challenge a matter that the Competition Commission had referred to the Competition Tribunal. At the time, Telkom said the “competition authorities lack the competence to rule on a market dominance complaint lodged by the value-added network service providers”.
However, the SCA disagreed and ruled in favour of the commission last week, which could finally put an end to telecoms companies hiding behind sketchy jurisdictional issues, paving the way for the tribunal to take on the commission's latest referral.
Pay up
At the end of October, the Competition Commission recommended the fixed-line operator be fined 10% of its annual turnover for the year ended 31 March 2009, which is the maximum fine that the commission can recommend.
The Competition Tribunal has never actually imposed the maximum fine. The largest ever handed out by the authorities was the R600 million fine that steel producer Mittal was slapped with a few years ago.
With Telkom's revenue for the year sitting at R33.7 billion, Telkom's fine would be in the region of R3.37 billion - almost five times the amount paid by Mittal (5.5% of its turnover).
The tribunal cannot say whether it will hand Telkom the maximum penalty, since it needs to evaluate the case before it makes a ruling. It is unlikely the full 10% will be levied, since there may be economic consequences for the industry as a whole, and government's 30% stake could keep the legislative hand at bay.
Despite not being able to comment on the case itself, recently-appointed tribunal chairman Norman Manoim says the tribunal is pleased with the ruling by the SCA since it does “clarify an unclear jurisdictional issue”.
The Competition Commission's Telkom fine will still have to pass through the Competition Tribunal's halls before it will be given the go-ahead. It is unclear how the next aspect of the process will play out.
Telkom is still mulling the court judgement and has declined to comment, other than to say it is considering its options.
Related story:
Telkom reels after court judgement
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