Press release: ISPA Welcomes the Prohibition of Telkom’s Acquisition Of BCX
The Internet Service Providers’ Association welcomes the Competition Tribunal’s prohibition of Telkom’s attempted acquisition of BCX.
“This decision marks a victory for both ISPA’s members and for consumers,” says Greg Massel, ISPA’s co-chair. “As both the supplier of key services to ISPs and a direct competitor in the Internet market, Telkom has exploited its dominant position for more than a decade. Anti-competitive practices such as margin squeezing and vertical bundling have resulted in high prices for consumers and made it extremely difficult for independent ISPs to compete fairly,” he said.
ISPA was a key opponent of the BCX deal, raising concerns with the Tribunal that the acquisition would further entrench Telkom’s position in the market, allowing it to engage in vertical integration through BCX and provide attractively “bundled” services by using revenues gained from basic services to cross-subsidise its offerings in competitive areas.
Massel continues: “ISPA has fought against anti-competitive activities in the Internet market since the Association’s inception in 1996. The Competition Tribunal’s decision gives us heart that the playing field in South Africa is finally beginning to level, and presents a clear message to Telkom that the authorities are committed to a fair and truly competitive communications sector.”
ISPA wishes to express its gratitude to its members, all of whom have dug deep into their pockets to help ISPA fight what has been an expensive battle. ISPA also wishes to thank its legal team, lead by Webber Wentzel Bowens, and Mike Brierley, who was ISPA’s lead expert witness for the case. Without the strong support provided by ISPA’s members, and the hard work of the legal team, this victory would not have been possible.
Sounding a word of caution despite this victory, ISPA notes that Telkom remains a dominant player in the market, and continues to engage in a number of practices that ISPA believes to be anti- competitive. In particular, pricing of wholesale ADSL accounts and wholesale access to ADSL services remains an area of key concern for the Association.
ISPA remains committed to fighting for fairness and healthy competition in the sector, and hopes that with the Telkom/BCX matter now resolved, the Competition Commission will be able to move swiftly to deal with ISPA’s other complaints against Telkom, including resolving the 2002 complaint for which the Commission initially recommended a R3 billion fine for Telkom’s anti-competitive actions in the market.
For further information, please contact the ISPA secretariat on the Contact ISPA page.