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Competition Commission targets cellular operators
Watchdog subpoenas key staff as it probes suspected collusion by Vodacom and MTN
October 19, 2009
By Thabiso Mochiko
MTN and Vodacom are in the price-fixing spotlight as the Competition Commission subpoenas key people in the telecoms industry to provide information related to allegations against the companies.
The broadening of the commission's investigation of possible price fixing by the cellular operators comes days after they appeared before Parliament's portfolio committee on communications to discuss the reduction of interconnection rates.
Commissioner Shan Ramburuth would not comment on how many people were subpoenaed nor which companies they worked for. "We have subpoenaed people to provide us with information. The process of interviewing them is under way. It's hard to say how long it will take, I don't want to prejudge a case," he said.
Formal complaints against the industry date back four years, but the commission's investigation of MTN and Vodacom has been bolstered by accusations of collusion in pricing, including interconnection rates, which they raised by 500 percent to R1.25 when Cell C entered the market in 2001.
Ramburuth confirmed that the portfolio committee had also referred the matter to it last week during the hearings on interconnection fees.
Among the high profile complaints was one filed in July by ID leader Patricia de Lille, which became the third formal complaint received.
Asked why the commission had been unable to complete its investigations after receiving two complaints four years ago, Ramburuth said the difficulty was the ability to find evidence of "explicit collusion".
He said: "Vodacom and MTN set the rate between themselves and in that agreement have a non-discrimination clause, which says that everyone will be charged the same. In circumstances like that (the difficulty is to establish) explicit collusion. The situation somehow provided a defence for the cellphone companies, who claim that they did not collude and that the regulations required them to do that."
However, he said that the commission would look at other possible price collusion in areas such as retail pricing.
He did not want to give a deadline for the investigations.
Both MTN and Vodacom have denied collusive conduct relating to interconnect fees.
In its response, MTN said this was the third investigation by the Competition Commission against cellular operators relating to interconnection.
"MTN denies there is any merit in these complaints, and the Competition Commission has not instituted any action against MTN," it stated.
Vodacom said it had not received any communication from the commission regarding the investigation.
Interconnection fees are the rates the operators charge one another and other operators to carry calls on their networks.
The investigation is putting the Independent Communications Authority of SA (Icasa) on the defensive as it has been strongly criticised for delays in regulating fees for the past eight years. This is despite having received the financial details showing how much it costs operators to provide the services in relation to what it charges subscribers and also complaints from the industry.
The Department of Communications has instructed Icasa to lower interconnection rates by the end of next month.
Ramburuth lashed out at Icasa, saying it was a lack of proper regulation that had brought the complaints forth.
Icasa has six weeks to complete the interconnection rate regulations and Ramburuth said although the two matters were linked, they would work together if the need arose.
Icasa is to meet with the operators on Friday to discuss reducing interconnection rates.
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