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Record:
| Header: |
Directory Solutions and Telkom |
| Case No : |
77/IR/Nov09 |
| Parties: |
Directory Solutions cc
AND
Telkom SA Ltd Trudon (Pty) Ltd formerly known as TDS Directory Operations (Pty) Ltd |
| Case Rating: |
3 |
| Date: |
8/4/2010 |
| Time: |
10:00:00 AM |
| Case summary: |
The Competition Tribunal granted interim relief to Directory Solutions (DS) against Trudon and Telkom (Telkom) with costs. Trudon is owned 64.9% by Telkom and publishes the official telephone directories, the white and yellow pages on behalf of Telkom.
The Tribunal has ordered Trudon & Telkom to accept DS’ customers (subscribers) without upfront payments. It has also ordered Trudon &Telkom to publish all subscriber entries provided by DS for the regions of the South Cape, Karoo, Boland, West Coast, Johannesburg and the East Rand. An order of costs against Trudon was also granted.
DS asked the Competition Tribunal for an interim relief order to make it compulsory for Telkom to publish their customers’ enhanced directory entries without requiring upfront payment from subscribers who utilise the services of DS rather than those of Trudon and to publish all entries submitted by DS in the applicable telephone directories. The interim relief application was sought by DS in relation to a complaint it has lodged with the Commission (DS’ complaint, that Telkom has committed an abuse of dominance, is currently being investigated by the Competition Commission).
Every subscriber of Telkom is entitled to a free entry in the white or yellow pages containing minimum data in light print type which is the default type of entry.However if a customer requires any enhanced listings which include the conversion of the default “light type” listings into listings that are inserted in bold and/or blocks in order to highlight them on the page of the directory in which they appear, Trudon levies a charge and these monies are collected via the customer’s monthly Telkom bill. It does not require an upfront payment from its own customers. Trudon employs an internal sales force which solicits entries from subscribers.
DS also solicits entries from subscribers. It assembles information for insertion on behalf of its customers into the Telkom Directories, published by Trudon. DS advises its client on how to best combine free and cost-effective entries, together with expensive enhanced entries in order to achieve the best layout. DS charges its customers a flat fee for its services. However Trudon requires DS’ customers to make upfront payment for its entries before accepting them for publication.
Telkom concedes that it refused to accept enhanced directory entries submitted by DS, unless they are accompanies by an upfront payment of the amount charged by Telkom for the publication of those entries on behalf of customers. Telkom attempts to justify this differential treatment of subscribers, who use the services of DS, by asserting that its conduct is commercially reasonable. This is in view of the fact that Telkom received many irate messages from customers alleging that they were duped by DS into thinking that DS’ charges for its services include Telkom charges for the insertion of the relevant entry when in fact they represent only DS’ fee for its services.
The Tribunal says, the subscribers who made such complaints may well have done so in the era preceding DS’s adoption of its current standard letter which makes it clear that the fee they pay to DS does not cover Telkom services. The relevant customers can also pursue their own remedies in the courts and if necessary in dispute resolution fora under consumer protection legislation.
There simply is no evidentiary basis on which to conclude that Telkom’s upfront payment requirement of the group of customers who submit their required directory entries through DS is in the best interest of these customers
Telkom is a licensed monopolist in the market for the publication of official telephone directories. The barriers to entry into this market are not of an economic nature – as they stem from regulation which establishes special rights ie. a licence to and indeed obligation to publish official telephone directories. Since no other party has the right to publish these official telephone directories, Telkom fulfils a so-called ”gate-keeper” function in respect of all subscriber entries in the official Telkom directories.
The Tribunal says, it is not open to a dominant firm to take drastic action with exclusionary effect against a lesser competitor for perceived infringement by this competitor, of the rights of third parties, merely on the grounds that the third parties are customers of the dominant firm. There is no place in the antitrust system for such a Don Quixote.
We do not think we have heard a full and frank account of the motives for Telkom’s policy of opposition to the activities of DS. Telkom may be seeking to shield its accredited agencies against the competition to their business, which DS represents, or it may have a perverse motive simply to destroy an entity which on some level represents unwelcome and intrusive competition. A very large number of customers are seemingly willing to pay DS a fee for the service it renders, and it is plausible that since DS can only flourish on the back of inefficiency or intransigence on the part of Telkom in its treatment of subscribers to Telkom telephone services, DS will naturally be seen by Telkom as a mortal enemy.
With regard to irreparable harm, if interim relief - along the lines sought by DS - is not granted by the Tribunal and DS does not bow to Telkom’s requirement for upfront payment from subscribers it is clear that DS will be unable to meet its customers’ need for the most speedy possible insertion of the required entries into the appropriate directories. Moreover, given the imminent directory publication date it is plausible that certain subscriber entries would not be published in the forthcoming Telkom directories if the DS solicited entries in question are not accepted for publication. DS submitted that it averaged approximately ten thousand new business clients per month whose entries do not appear in the current Telkom directories. We, therefore, anticipate that the exclusion of these entries in the forthcoming Telkom directories could have a potentially detrimental effect on a large number of (small and other) businesses.
On the issue of the balance of convenience, the weighing of the interests of the parties appears to favour DS. If interim relief is not granted DS will lose revenue and face contractual and reputation difficulties with dissatisfied customers. On the other hand, if the relief is granted Telkom will lose no business or revenue. Telkom will lose the benefit of having upfront cash in its account as pre-funding of these payments of subscribers but that does not appear to outweigh the harm to DS.
The order will remain in force until a date six months after the date of this order, or, if earlier, the date on which complaint proceedings with the Competition Commission are concluded. The order will lapse if the Commission fails to refer a complaint to the Tribunal. |
| Keywords: |
interim relief,directory services, publication of official directories, solicitation of entries in telephone directories, national, abuse of dominance, section 8(c) and 8(d) |
| Judgment source: |
Competition Tribunal |
| Documents: |
77IRNov09.pdf
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| Last update user: |
tebogo mputle |
| Last update date: |
20/4/2010 10:23:40 AM |
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