Telecom NZ hit with record antitrust fine

Dylan Bushell-Embling
19 Apr 2011

Telecom NZ has been slapped with a record NZ$12 million ($9.47 million) fine for allegedly anti-competitive wholesale pricing, hours after it submitted its final proposal for the separation of its wholesale division.

The Auckland High Court today imposed the fine, the largest penalty yet meted out under New Zealand's Commerce Act, in a case initiated by competition regulator ComCom.

ComCom said that the judge in the case had found that the breach, involving charging disproportionately high wholesale prices between 2001 and 2004, was “the result of a deliberate strategy, apparently sanctioned at the highest levels.”

The fine was calculated based on Telecom NZ's size, prominence and market power.

But Telecom NZ noted that the court had found that only a limited number of access seekers had been affected.

The operator said it was already appealing the verdict on liability, arguing it had breached regulations unintentionally, and would consider the penalty demand in the context of this appeal.

While this case related to an older pricing regime, it underscores the ongoing tension between the operator and regulators over market power. The government has been pressuring Telecom NZ to separate its wholesale and retail divisions to address their competition concerns.

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