19 Apr 2011

Record $12m fine for Telecom

4:11 pm on 19 April 2011

Telecom has been fined a record $12 million for anti-competitve behaviour - the highest penalty ever imposed under the Commerce Act.

The fine follows a long-running dispute involving allegations that the telecommunications giant denied competitors fair access to internet connections.

The High Court in Auckland imposed the fine on Tuesday after earlier finding that Telecom had breached the act.

In the judgement released, Justice Hansen said Telecom's strategy was apparently sanctioned at the highest levels and the penalty should reflect the company's size and financial circumstances.

The fine stems from a 2009 High Court ruling that found that between 2001 and 2004, Telecom charged competitors disproportionately high prices for wholesale access to what are known as data tails.

The data tails are the connections that competitors must get from Telecom where their own networks do not reach the customer.

The High Court found that Telecom's wholesale prices often exceeded its retail prices and its data tail pricing deterred competition.

Telecom says it is already appealing against the 2009 ruling on the basis that any breach of the act was technical and unintentional, and says it will consider the latest ruling carefully.

It says the appeal is scheduled to be heard in September this year.

The Telecommunications Users Association says the case is unlikely to set a precedent.