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Record $12 million penalty against Telecom stands in 'data tails' case

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Telecom New Zealand has lost an appeal against a NZ$12 million fine imposed last April for breaching the Commerce Act.

The Court of Appeal found that from February 1999 to late 2004 Telecom unlawfully took advantage of its market power to charge downstream competitors disproportionately high prices for wholesale access to its network. This prevented competitors from offering retail end-to-end high-speed data transmission services at a competitive price.

The Court of Appeal's decision follows an earlier judgment in which the Court of Appeal also ruled against Telecom's challenges to the Court's substantive findings. The Commerce Commission had brought penalty proceedings against Telecom for breaching section 36 of the Commerce Act.

In its latest judgment, the Court of Appeal said, having recognised a separate breach over and above what the High Court had found, that "...the penalty is by no means excessive given the extent of the breach we are now dealing with."

"A significant penalty such as this sends a strong signal to businesses that taking advantage of market power to prevent rivals from competing effectively is a serious breach of the Commerce Act. Consumers and rival businesses must have the full protection of the law to enjoy the benefits of competitive markets," said Commerce Commission Chair Dr Mark Berry.

Telecom may seek leave to appeal to the Supreme Court against the Court of Appeal's findings.

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Tags: telecom new zealand  commerce commission  New Zealand