Consumers who may be looking forward to seeing Telkom being fined 10% of its annual turnover shouldn't hold their breath.
Although the Competition Commission has referred complaints laid between 2005 and 2007 by the Internet Service Providers Association ("ISPA"), Verizon South Africa, MWeb and Internet Solutions about Telkom's abuse of dominance to the Competition Tribunal for adjudication, the complaint is likely to face significant jurisdictional and substantive legal hurdles and may take years to resolve.
Firstly, Telkom may raise the same jurisdictional challenge it raised in relation to complaints laid by the South African VANS Association (together with Omnilink, Internet Solutions and 18 other VANS providers) regarding Telkom's refusal to provide telecommunications facilities to value added network service providers (VANS), to ‘peer' with VANS and/or to lease access facilities directly to VANS. Although these complaints were referred to the Tribunal for adjudication in 2004, Telkom applied to the High Court to review the Commission's referral on the basis that its conduct was authorised by the telecommunications legislation and its licence. Therefore, Telkom argued, the Competition Act did not apply to its conduct at all. This review staggered through preliminary skirmishes and was eventually heard in 2008. Although the High Court granted Telkom's review application on other grounds, it did not decide on the crucial jurisdictional issue. Appeals by both the Commission and Telkom are due to be heard by the Supreme Court of Appeal in early November 2009.
The Competition Amendment Act is intended resolve this jurisdictional issue by clarifying that the Commission has the primary responsibility to police complaints about anti-competitive conduct, and ICASA has the primary responsibility to establish conditions in the sector to promote competition. However, the Amendment Act has not yet been signed into law by the President and even then, it is poorly drafted and will be a fertile field for procedural litigation. In particular, it is not clear to what extent it will apply to complaints which arose before it came into effect. Although this amendment may make it significantly harder for Telkom to bring jurisdictional challenges. Challenges are probable.
Secondly, it appears from the Commission's press release that the basis for the referral is that Telkom contravened section 8 (a) of the Competition Act, which prohibits a dominant firm from charging an excessive price to the detriment of consumers. There is considerable uncertainty about the proper interpretation of this section and the test for what constitutes an excessive price. There is thus likely to be a protracted hearing which will focus on the Commission's conclusion that Telkom charged excessive prices, and interrogation about whether it is appropriate to compare Telkom's prices to its costs, to prices in other countries, and to prices of other operators offering similar services and prices to customers of Telkom who posed a competitive threat to it.
Similar debates will arise if the complaint is based on the argument that Telkom charged excessive prices in order to disadvantage its downstream competitors (known as a ‘margin squeeze' ) in contravention of the prohibition on exclusionary acts contained in section 8(c) or 8(d)(i) of the Act. International case precedent demonstrates that these cases are hard to prove and are usually protracted.
It may be a long while before Telkom has to pay any massive fine for contravening the act - if it happens at all.

Written by: Heather Irvine of Deneys Reitz