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Court of Appeal upholds record $12M fine against Telecom

Friday 3rd August 2012

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Telecom Corp., the biggest company on the NZX 50 Index, has failed to overturn a record $12 million fine imposed for breaching competition law by misusing its market power.

The Court of Appeal upheld the fine imposed in the High Court in Auckland in April last year for breaches of 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," the Commerce Commission said in announcing the decision.

"This prevented competitors from offering retail end-to-end high-speed data transmission services at a competitive price," it said.

Commission chairman Mark Berry said the fine "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."

In its High Court ruling last year, Justice Rodney Hansen said breach of section 36 of the Commerce Act "was the result of a deliberate strategy, apparently sanctioned at the highest levels of Telecom, to price data tails at a level that would preclude price competition between Telecom" and other service providers..

The fine is the highest imposed under the Commerce Act for anti-competitive conduct.

Shares of Telecom fell 1.7 percent to $2.655 and have gained 28 percent this year.

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