Telecom in court over alleged loyalty offer breaches

Friday 6th November 2009

Telecom will face the Commerce Commission in the High Court over its alleged breach of its operational separation undertakings in a wholesale loyalty offer, the Commerce Commission announced this morning.

The action follows findings in August by the Independent Oversight Group, which Telecom is required to appoint to monitor its market behaviour, that the country's largest telecommunications company made "non-trivial" breaches in respect of a wholesale loyalty offer which sparked complaints to the IOG from competitors Vodafone NZ and Orcon's parent, Kordia Ltd.

Telecom faces fines of up to $10 million per breach if the Commerce Commission wins the action.

Kordia alleged in its original complaint that Telecom had breached requirements not to discriminate between service providers under clauses 47 and 56 of the Separation Undertakings.

In a statement, the Commission also indicated that there has been a lack of clarity about the meaning of "discrimination" under clause 56 of the Undertakings.

"The Commission intends to provide Telecom and the industry further guidance on Telecom's obligation not to discriminate."

The loyalty offer in question was first offered last December, to Telecom customers that had 90% or more of their Auckland business with the company. The offer has since been expanded to cover other centres.

Vodafone and Kordia said the loyalty offer would prevent them from further unbundling local exchanges and would kill off their wholesale fixed-line businesses.

Businesswire.co.nz

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