Telkom faces R3.5bn competition fine

2012-02-14 22:34

Johannesburg - Telkom will appear before the competition tribunal on Wednesday, in a case which may see the company go bust, SABC news reported on Tuesday.

The Competition Commission has asked the tribunal to find Telkom guilty of excessive pricing and abuse of the market and wants the company to be fined R3.5bn, the broadcaster said.

Eight years ago, an investigation by the commission found that Telkom was guilty of charging excessive prices to smaller independent companies - which relied on the company's network infrastructure to provide data services like the internet and SMS.

The commission also found that Telkom was discriminating against the independent service providers in that its charges were less for companies affiliated to it.

The proposed R3.5bn penalty has raised a few eyebrows, SABC reported.

"Any fine of R3.5bn is very big for any company in South Africa to pay and you could have a problem where the company's survival at stake," Mike Schussler, director of, was quoted as saying.

"When you look at that kind of fine in a company that's really got declining revenues, if you really look at it, it's really going to be difficult for it to survive under that sort of fine and I think we need to get the balance right between competition and the ability of a company to carry on."

Telkom is expected to centre its argument around this when it takes the stand on Wednesday, SABC said.

The company is expected to first argue for the case against it to be dismissed, failing which the penalty against it should be symbolic rather than punitive in nature.

  • Skia - 2012-02-15 00:35

    this could make life interesting. not necessarily better, just interesting. and in the mean time me thinks it time to expand the WUGs (Wireless User Groups) - for the western cape and there are others around the country

  • Marcell - 2012-02-15 02:42

    In MHO the R3.5bn is symbolic. Hellkom have ripped everyone off for way to long. This will be a symbol for the Hellkom replacement that it is not fair to rip your customers off. Hope the tribunal has balls and send these idiots to the bin. Sell your shares if you have not do so yet.

  • Silvana - 2012-02-15 05:30

    If they're found guilty and have to pay the fine, can someone tell me where that money goes to?

      Marcell - 2012-02-15 06:45

      Pravin Gordhan.

  • Ziggie - 2012-02-15 07:07

    Pity no one is fining Eskom also for ripping us off, when is someone charging them under the competition bill for rippin us off???????????? HI ALL,I don't know about you but I certainly can't afford to have any more of my hard earned money ploughed into Eskom's mistakes and poor management. We have to try and fight this. It is shocking to think South Africans are just going to sit back an take this...!!! THIS IS VERY VERY IMPORTANT Please add your name and pass on to everyone you know.. We need everyone to add to our list; otherwise we are all going to pay ANOTHER 53% on our electricity bills since the increases started. I am already paying DOUBLE after this last increase on the 01 July. This is EVERYONE'S problem. This will only take a minute, unless you don't mind paying. TAKE NOTE, ESKOM HAS STOPPED LOAD SHEDDING UNTIL AFTER THE RATE HIKE COMES IN.....SO THAT WE CAN ACCEPT THE HIKE.....WITHOUT TOO MUCH MOANING. We have until the 19th to petition and there has been a poor response !!!!!! PETITION AGAINST ESKOM'S ELECTRICITY RATE HIKE OF 53 % PEOPLE, PLEASE!!!!!! WE HAVE TO STAND TOGETHER (IF ONLY THIS ONCE) ON THE ESKOM ISSUE. IT IS HIGH TIME WE STAND UP FOR WHAT WE WORK SO HARD FOR. DON'T BE PASSIVE.ADD YOUR NAME TO THIS LIST AND SEND IT ON, PLEASE!!! Why should we pay for their mistakes? Time is running out and we need to move fast! Every 500th person should please CC to CEO of Eskom

      nicksimp101 - 2012-02-15 07:20

      Dude, sorry but the Eskom issue is a real problem, they need the infrastructure, we have had it good for too many years already and are one of the cheapest countries in terms of electicity. The price hikes will bring us in line with the rest of the world.

      betsy.compaan - 2012-02-15 08:26

      @nicksimp101, What if we as South Africans can't afford to pay the same as the rest of the world? Are we a first world country? Can you afford it? In most of these countries there's more than one electricity provider which creates a system for healthy competition. We are paying for incompetence while the comrades dips their fingers in the pie once again. If electricty goes up EVERYTHING goes up how much more can we afford before we don't have money for food? I am tired of being a slave to a corrupt system.

      Justin.D.Glenn - 2012-02-15 08:26

      When Koeberg was built ESKOM was told to upgrade their system and build more power stations yet nothing much has been done.

      Peet - 2012-02-15 10:05

      Brilliant we must follow some european contries and attack the sytem that failed us before it is to late

      ludlowdj - 2012-02-15 12:43

      An cover up.......I mean investigation is currently under way although the fact that Eskoms policy of supplying foreign countries with electricity at a cheaper rate than available to South Africans, a clear violation of the international competitions act has clearly been swept under the carpet by the ANC who are also large shareholders.

  • pws69 - 2012-02-15 07:17

    Mike Schussler needs to look at the "too big to fail" US bank bailouts with tax money, and how that bailout money was used to strengthen these banks stranglehold on the market, making them even bigger (8 banks control 77% of the US market), and then tell us this fine is too much. I am tired of corporates having their cake and eating it.

  • Mervyn - 2012-02-15 10:12

    if "the company is expected to first argue for the case against it to be dismissed" and is found guilty, then it should pay the fine. Because they then knew they were guilty and still tried to get out of dishonestly.

  • tony.calitz - 2012-02-15 10:13

    Who are the idiots who run the Competition Commission? Don't they know that Telkom is the sole provider of ADSL to everyone, competitors included, in SA. bankrupt the company & say goodbye to our connectivity. Unfortunately this is what happens when nothing is done about corruption at the time that it is exposed. let's wait a few years & then REALLY slam them! Why not go after the government for issuing tenders to their mates as well - fine THEM R100 BILLION & let's just bankrupt the damn country at the same time! MORONS! @SILVANA - I'll tell you where the money will probably go to - SAA - they're asking for MORE money to survive AGAIN! :-)

  • Maera.Dogstar - 2012-02-15 10:20

    Actually, I don't think the Telkom charges that much, especially compared to what struggling people are forced to fork out towards Eskom! I think Eskom should be investigated and fined. It’s really not our fault that their “management” could not plan correctly, so why should we have to take the rap?

  • reza.daniels1 - 2012-02-15 11:42

    I think the R3.5 billion is fair and would set the correct precedent. They need to make a very good example for all monopolisers to see. They need to feel the burn in their pockets and not a symbolic middle finger. Also all previous CEO's since the time of the investigagtion need to be prosecutes and/or fined in their personal capacity. Bringing in additional service providers will not work in the South African context due to prolific price fixing/collusion which is a hallmark of South African big businesses. I would not be surprised to find price fixing/ collusion is rife amongst all business sectors. While I can understand the clothing industry's being uncompetitive due to cheap/slave/child labour in the east I cannot understand how for example imported meat being cheaper when despite import and high transport costs (has to be kept frozen). Another example would be the Steinhoff group who owns the wood chain from start to finish: 1) They own the tree plantations. 2) They own the mills who process the raw material. 3) They own the factories that create the product which is PG Bison. 4) They own part of the retail end - Timbercity. And yet you get imported boards and postform tops from Brazil and Italy which is cheaper. They are counting on getting away with it and love to "engineer" false losses in the chain eg up the milling costs to themselves.....thievery I tell you. But hey what do I know I'm just taking wild guesses here...

  • Zion - 2012-02-15 12:33

    The best news I have heard in years. My internet signal died a sudden death on Saturday, It revived it self for an hour on Sunday then redied permanently. The help line was/is chaos. On Monday I purchased a USB for R348 and a Gigabyte for R250. They mentioned the whole area is down and no mention as to when the signal will be back. All the while I was wishing the buggers will see their backside and so it is coming to pass.

  • ludlowdj - 2012-02-15 12:40

    Mike Schussler, director of comments are little more than the usual corporate buddy buddy bullsh*t one would expect, if Telkom has violated the competition laws it does not have a right to, nor should it have an expectation of preferential treatment, Companies need to understand that breaches of the competitions act is nothing more than theft from the man on the street, if they can't pay up, close them down and sell off their assets, there are large international concerns that would jump at the opportunity of taking over our fixed line services and who would do it at a much cheaper rate to the public. It is sad that every single organisation that has a large government shareholder base is either stealing blind or involved in some other form of public fund theft. As a matter of principle all cases involving violations of the competitions act should be viewed as fraud or theft and the companies must be shut down in the interests of the public and a clean and transparent business environment. My biggest concern is that case studies show that a company involved in price fixing is in most cases a repeat offender and also will in most probability resort to price fixing in the future again.

  • Rajan - 2012-02-16 08:01

    ICASA is the regulator, what where they doing? Telkom staff should force the country to relook it's competition which has been around since late 90s, Telkom should shutdown all its national/international backhaul infrastructure for one day, lets see how that affects the country?

  • Maria - 2012-02-18 22:25

    I'm an SA Expat living in the US.It is unbelievable just how my fellow citizen get ripped off. To complain = zero results. Action = Results. Form an Action law-suit against Telcom and Eskom.You have laws in SA that uphold unfair competition which includes preventing others from entering the market in competition. Gov. who sanctioned laws allowing ripoff by monopoly should also be considered as criminal. This is what you are missing I pay $14.99 per month for my LL and I can call anywhere in the world 24/7 speak for as long as I like and billing is ZEOR but for flat monthly fee. ALL CALLS ARE FREE !! Telcom has block competition like this.Same goes for INternet! Get your Class Action started NOW!

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