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Current as of 24/10/14 07:40PM NZST

Record Telecom fine for price hikes

By Susie Nordqvist

Telecom has been hit with a $12 million penalty, the highest imposed under the Commerce Act, for anti-competitive conduct dating back to 2001.

In October 2009 the High Court determined that Telecom leveraged its market power to charge downstream competitors disproportionately high prices for wholesale access to its network from 2001 to 2004.

The penalty is the highest imposed under the Commerce Act, which was amended in 2001 to increase the fines available for anti-competitive conduct.

Justice Rodney Hansen said in a decision released today, that Telecom's conduct was "injurious to competitors, brought significant benefits to Telecom and were damaging to the competitive process".

"The breach 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 (telecommunications service providers)," Justice Hansen said.

The penalty should therefore reflect the size and financial circumstances of Telecom and its position of influence and importance in the telecommunications industry.

"The goal of specific deterrence requires that the penalty take account of the size and resources of the contravening company," he said.

Telecom said it was appealing the October 2009 judgment. The appeal is due to be heard in September.

"Telecom continues to believe that the 'two data tails' breach was technical and unintentional, and this is the basis of its appeal," a statement from the company said.

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