Fixed-line operator Telkom was yesterday accused of being “obstructive” during Competition Tribunal hearings.
Telkom's legal manoeuvring means hearings into an abuse of dominance case brought against it will not take place for at least another year.
Last year, the commission and Internet Solutions (IS) referred complaints against Telkom to the tribunal, alleging Telkom's wholesale pricing was excessive and harmed downstream providers such as IS. The commission's investigation took place between 2005 and 2007.
Yesterday, the tribunal convened, in Pretoria, to hear several technical objections that Telkom lodged in March relating to legal issues within the referral. Telkom has yet to answer the commission's allegations of abuse of dominance as this hearing is now only likely to happen late next year while the technical aspects are considered by the tribunal.
Among Telkom's objections was that the commission's calculations around its pricing were without a factual base, IS's two referrals resulted in a duplication of charges, and allegations of margin squeeze and excessive pricing should be heard separately, not together, which could result in prolonging the case when it is heard before the tribunal.
The commission is seeking a fine of 10% of Telkom's 2009 turnover, which amounts to almost R3.7 billion.
Fatally flawed
Advocate Rafik Bhana, Telkom's senior counsel, argued that the commission had not worked out its excessive pricing case correctly and did not have sufficient facts for a case. He said the commission did not provide an economic value of Telkom's services, instead relying only on Telkom's costing and market price, which is incorrect.
Bhana added the commission could not concurrently charge Telkom with excessive pricing and margin squeeze as this results in a duplication of charges based on the same evidence. He noted that these should be alternative charges.
“Insufficient facts have been set out and there are clearly missing allegations,” argued Bhana. He said the commission should rectify its referral.
However, advocate Owen Rogers, acting on behalf of the commission, argued that it had been a year since the referral was served on Telkom, and accused the company of buying more time. “Telkom is trying to make it impossible to submit an excessive pricing case by wanting more details.”
Rogers also pointed out that Telkom had waited a year “before troubling the tribunal with arguments that have already been heard” in other unrelated cases, where they had been resolved.
In addition, argued Rogers, the exception would result in a year's delay before the tribunal could hear the main case, and would not limit the amount of evidence to be heard. He said exceptions should be brought to reduce the amount of evidence.
Telkom's argument that the margin squeeze charge and the excessive pricing case should be separated is an “obstructive'” objection, noted Rogers.
Seen before
Keith Weeks, head of the commission's Enforcements and Exemptions Division, said past experience suggests Telkom will follow every legal avenue open to it before the actual case can be heard at the tribunal.
He said it may only be heard towards the end of next year “if we are lucky”.
Weeks pointed to a current case against Telkom, set to be heard before the tribunal next year, which has dragged on for years. The complaint, alleging abuse of dominance, was lodged by the SA Value-Added Network Association and the case was referred to the tribunal in 2004.
However, legal wrangling over whether the tribunal or the Independent Communications Authority of SA had jurisdiction against Telkom caused the matter to be dragged on for years. The Supreme Court of Appeal ruled in the commission's favour, which removes this avenue of appeal, noted Weeks.
The tribunal has yet to rule on any of the issues raised yesterday, and the case was adjourned around lunchtime with no time frame for a decision being specified.
Telkom will not comment on the matter as it has not yet been resolved and, as such, it says it is sub judice.
Back to the beginning
The commission's investigation into abuse of Telkom's “near-dominant” position followed complaints lodged by Internet service providers, including IS.
Last year, the commission indicated it would only refer certain aspects of the investigation to the tribunal, but took four months to submit its case. The delay resulted in IS referring the entire matter to the tribunal, and then submitting a further referral based on the commission's actual lodging.
Yesterday, Telkom argued IS's first referral should be scrapped because it overlapped with the second. Tribunal chairman Norman Manoim ordered the parties to sort out the issue.
Both parties agreed the first referral would be abandoned, and the second would be tidied up. However, Telkom's legal team refused to concede that IS should not be penalised for this, as the referral will then exceed the time frame allowed for in the Act.
Manoim exclaimed: “What we are trying to do is work out whether your [Telkom's] concerns about having two processes has been resolved.” He insisted that both parties argue the matter immediately.
No decision has been handed down on this argument yet.
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