Telecom will pay $1.6 million to rivals Vodafone and Orcon following a settlement with the Commerce Commission over its wholesale division’s ‘loyalty offers’.
Between December 2008 and July 2009 Telecom Wholesale offered discounts to ISPs on the condition that they didn’t buy services from competing wholesale providers such as Orcon and Vodafone. These so-called ‘loyalty offers’ prompted complaints to Telecom’s Independent Oversight Committee, who ruled in a preliminary decision that they were a “non-trivial breach of the separation undertakings.”
Following this decision, Telecom Wholesale withdrew the offers and the Commission launched an investigation. In a media statement today Telecommunications Commissioner Ross Patterson says the loyalty offers were detrimental to investment and undermined wholesale competition.
“The $1.6 million settlement means that the complainants Vodafone and Orcon have been compensated, and that further harm to the competitiveness of the market has been prevented. While the issue was serious enough for the Commission to consider issuing proceedings, we are pleased to have worked constructively with Telecom to settle this issue. The settlement avoids potentially lengthy and expensive litigation,” Patterson says.