Telecom NZ abused market power, court rules

Dylan Bushell-Embling
14 Oct 2009

New Zealand's Commerce Commission has won a high court battle against Telecom NZ, with the court agreeing that the operator abused its market power to deter competition.

The Auckland High Court held that Telecom charged disproportionately high rates for wholesale access to its data transmission access lines during the period between 2001 and 2004.

This action - which was a breach of New Zealand's Commerce Act - prevented ISPs from offering competitive retail prices for high-speed data services.

Telecom's wholesale charges were often higher than its retail prices during this period, the court found.

“The commission is pleased with the court’s decision, which confirms that dominant firms must price essential inputs to [downstream rivals] so as to enable efficient competitors to compete,” Commerce Commission chair Mark Berry said.

The court found that Telecom aimed to deny competitors access at prices that would allow them to develop their own data transmission networks, Berry added.

Telecom will now have 20 days to appeal the decision. The court will determine financial penalties at a later date.

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