Telkom has not ruled out the possibility of settling some of the Competition Commission's allegations out of court, but its head of legal affairs, Anton Klopper, says the group is “not guilty as charged”.
Earlier this week, the Competition Commission said it was asking the Competition Tribunal to levy the biggest fine in South African history, of about R3.5 billion, or 10% of Telkom's turnover, against the dominant fixed-line operator.
The charges, or referrals, allege Telkom abused its near-monopolistic position in the market to the detriment of consumers, businesses and its possible rivals.
The commission concluded that Telkom charged excessive prices. This followed a comparison of its tariffs and costs, prices in other countries, fees of other operators offering similar services, and prices charged for customers that posed a competitive threat.
The findings for this case were brought about by various complaints levelled at Telkom by the Internet Service Providers' Association, Internet Solutions, MWeb and Verizon SA during the period from 2005 to 2007.
However, Klopper points out, there is another case that was brought against it by the South African Value-Added Network Services Association (SAVA) in 2002, the outcome of which could have a decisive bearing on the current matter.
He says that, in the SAVA instance, Telkom successfully appealed before the High Court that the competition authorities (which includes the commission and tribunal) do not have jurisdiction over it. However, the Competition Commission has taken this to the Supreme Court of Appeal and the outcome of that case is expected to be delivered on 2 November.
Further complicating both cases is that the legal framework has changed. The Electronic Communications Act replaced the Telecommunications Act in 2005.
Last year, a High Court ruling opened up the awarding of individual-electronic communications network services licences to VANS, which gives smaller companies the same rights as those that held public switched telephone network licences under the old licensing regime. These factors may affect the outcome of the latest Competition Commission case.
“The substance of the complaint is also highly complex and is by no means clear,” Klopper says. “When these charges were originally filed there was a different Act and different licence conditions in place. We also have to consider what Telkom's and the complainants' rights were at that time.”
Telkom has 204 working days in which to file papers defending its stance against the Competition Commission, before the matter appears before the Competition Tribunal, which will then uphold, modify or overturn the commission's findings.
Klopper says: “The timelines for a matter of this nature to reach final conclusion are difficult to predict at this early stage.”
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