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Watchdog to probe MTN, Vodacom call rates

Cape Town - The Competition Commission has confirmed on Wednesday that it received the anti-trust complaint by Cell C against MTN [JSE:MTN] and Vodacom [JSE:VOD].

Competition Commission deputy commissioner Trudi Makhaya confirmed they had received the anti-trust complaint.

The complaint was lodged on Tuesday and relates to the pricing the two networks charged their own customers to call people on other networks.

"The action we are required to take is to investigate. We will go into the pre-investigation phase where we process and screen," said Makhaya.

"[After investigation] a recommendation is made and there could be no problem. If there is a problem, we'll say which parts of the [competition] act have been breached and what the penalties are."

She said companies could be required to halt the relevant conduct, implement remedies to comply with the act or pay a penalty of up to 10% of their gross revenue for the year preceding the complaint.

The investigation could take between a week and three months to complete.

Cell C believed the pricing had a "dramatic and direct" impact on smaller operators’ ability to acquire new customers.

"The two dominant incumbents discount their effective on-net prices substantially while charging a premium for their customers to call off-net," Cell C CEO Alan Knott-Craig said in a statement.

"This amounts to discriminatory pricing and is without doubt anti-competitive when adopted by dominant operators."

Knott-Craig said users were often not aware they were being penalised for calls to other networks.

"With number portability, customers don’t always know if they are calling on- or off-net anymore, so they don’t actually know what rate they are paying."

He said dominant mobile networks overseas faced stiff fines for this practice.

"Cell C is apparently arguing for an increase in the price that Vodacom customers pay to call other Vodacom customers," said Richard Boorman, a spokesperson for Vodacom.

"It's hard to argue that increasing prices would be a benefit to consumers," he said.

MTN dismissed the complaint as "spurious" and said there was no anti-competitive conduct as alleged by Cell C.

"We see this as another desperate attempt to cry for further subsidies for a failing business," said MTN's SA chief executive of Zunaid Bulbulia.

 - Sapa and Reuters



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