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Record $12 million penalty against Telecom stands

Record $12 million penalty against Telecom stands in ‘data tails’ case


The Court of Appeal has upheld a record $12 million penalty imposed against Telecom in April 2011 for breaching the Commerce Act, following an unsuccessful appeal by Telecom.

The Court’s decision, released today, follows a judgment dated 27 June 2012 in which the Court of Appeal also ruled against Telecom’s challenges to the Court’s substantive findings. The Commerce Commission had brought penalty proceedings against Telecom for breaching section 36 of the Commerce Act.

The Court of Appeal found that from February 1999 to late 2004 Telecom unlawfully took advantage of its market power to charge downstream competitors disproportionately high prices for wholesale access to its network. This prevented competitors from offering retail end-to-end high-speed data transmission services at a competitive price.

In its latest judgment, the Court of Appeal said, having recognised a separate breach over and above what the High Court had found, that “...the penalty is by no means excessive given the extent of the breach we are now dealing with.”

“A significant penalty such as this sends a strong signal to businesses that taking advantage of market power to prevent rivals from competing effectively is a serious breach of the Commerce Act. Consumers and rival businesses must have the full protection of the law to enjoy the benefits of competitive markets,” said Commerce Commission Chair Dr Mark Berry.

Telecom may seek leave to appeal to the Supreme Court against the Court of Appeal’s findings.

The Commission has no further comment at this time. The judgment is available at www.comcom.govt.nz/competition-enforcement-outcomes/

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