SA telecom company set to prove monopoly exists

Von Theo Boshoff

Orion Telecom Networks Inc. is more determined than ever to prove its case against Telkom SA Ltd. regarding the monopoly?s anticompetitive behavior after it finally received the unmarked documents concerning the monopoly?s contracts with previous Orion customers -- Standard Bank Group and Edgars -- which Telkom claimed were ?secret?.

Almost a month after Telkom lost its appeal to the Competition Appeal Court on Dec. 17 whereby the court ruled in favor of Orion, and ordered Telkom to provide its confidential contract documentation with the said companies to Orion, Don Tredoux, Orion Telecom MD, took possession thereof on last Tuesday.

Tredoux could not comment on any of the classified information within the contracts, but says: ?We are pleased that we went the extra mile and stuck it out, to get the documents.?


Orion filed a motion with the Competition Commission on Sept. 17, 2003 to obtain the documents, and, in April that year lodged a complaint whereby it claimed that Telkom had illegally induced its former customers -- Standard Bank and Edgars -- to end their long-standing contracts with the company for the provision of cellular least cost routing services.

It has taken almost 18 months for the company to make a breakthrough and obtain these documents to support its claims against the monopoly.

Not just for Orion

Orion says that in light of the impending liberalization of the telecommunications market, ?our victory is a high profile showpiece for government?s plans to clamp down on anti-competitive behaviorö.

Tredoux goes on to say: ?This is not just about Orion and its customers, it is about the way in which Telkom continues to treat the telecommunications industry as its own personal fiefdom.?

Continues Tredoux: ?In spite of Telkom?s attempts to hide the proverbial smoking gun, the Competition Appeal Court saw through Telkom?s ruse and affirmed that the agreements were not confidential.? Tredoux says that he received the two unmarked confidential contracts between Edgars and Standard Bank and Telkom on 11 January 2005 and says that they basically confirm Orion?s claims in terms of its allegation that Telkom is ?stealing? Orion?s customers.

Says Telkom communications specialist, Ravin Maharaj: ?Telkom confirms that the Competition Appeal Court has upheld the decision of the Competition Tribunal and Telkom has handed over the confidential documents regarding the Standard Bank and Edgars contracts to Orion attorneys for litigation purposes only, and in the strictest of confidence.?

Losing Absa

Adding to the already charged situation is the termination of Absa Bank?s contract with Orion on 10 December last year, seven days before the Competition Appeal Court?s ruling. Absa, in a letter to Orion, cancelled its contract with the company and announced its departure to make use of Telkom?s services.

?Due to this latest event with Absa we are now also asking for the Telkom/Absa contract,? Tredoux says. ?If we find that Telkom illegally induced Absa we will also refer this matter to the competition authorities, which we believe will prove our allegations and make our case even stronger,? Tredoux notes.


?The terms of the Standard Bank and Edgars agreements strongly support our case, and we expect the terms of the Absa agreement to do the same. Telkom is offering very select deals to only a few major corporations, while the rest of the SA corporates and the public still have to pay high prices for telephony and subsidize Telkom?s clandestine dealings with select large corporates. These deals are then used by Telkom to kill off competitors,? believes Tredoux.

He adds: ?We are currently completing our final affidavit, which is about 90 percent done, to be handed to the tribunal, and, with the new information contained in the documentation, will add to it, in order to substantiate our claims.? Orion is seeking legal assistance, under confidentiality, from a commercial standpoint, according to Tredoux, who also notes that the company expects to hand its final affidavit to the tribunal by the end of the month.

While Telkom maintained, until the ruling, that the contracts in their entirety did not contain any inducement, and that the contracts were confidential, Tredoux states that even the sections of the contracts Telkom had initially handed over were sufficient to show illegal inducement. ?Of significance,? he says, ?is the fact that the Standard Bank contract contains a clause specifically inducing Standard Bank to discontinue trading with Orion Telecom and to move all of its business to Telkom for an across-the-board discount. Clause 5.7, which is not confidential per the Competition Tribunal and Appeal Court, states that ?(Standard Bank) undertakes to use Telkom for all fixed-to-fixed and fixed-to-cellular calls for the term of this agreement.?? Orion says that Standard Bank had no other choice but to cancel its contract with the company if it was to receive the benefits of Telkom?s offering.

This is one of the issues on which Orion?s complaint to the Tribunal against Telkom is based.

Tredoux notes that it is funny that the ?inducement? clause in the Edgars contract is different to that of the previous Standard Bank contract, whilst much of the remainder of the two contracts stayed the same. ?And this is even evident from the marked copies that are, under the terms of the ruling, public domain,? he says.

The battle continues

Orion is arguing that Telkom is cross-subsidizing competitive services with services for which it already has a monopoly, and intends to prosecute the matter to the full extent of SA Competition Law. In a newly competitive telecommunications environment, Orion Telecom claims Telkom should not be able to hide its anti-competitive behavior behind a veil of confidentiality, to the detriment of local corporates, and, ultimately, the consumer.

Maharaj says: ?Telkom remains confident that it has not acted in an anti-competitive manner in providing value and term deals to customers. The deals offered are part of commercially accepted agreements.?

Says Tredoux: ?We have a right to a fair chance in presenting our case and need as much information as possible to substantiate our claims. If we are looking at losing at the end of the day, we will accept it, but we want a fair chance.?