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10 Feb 2009 12:16
The costs award against Altech was justified, the Competition Tribunal said on Monday.
This followed the tribunal’s approval of the merger transaction between MTN and Verizon, and Altech’s intervention application which was withdrawn the day before hearings were set to begin.
The tribunal then ordered that Altech pay MTN and Verizon’s legal costs in respect of Altech’s intervention application.
According to the tribunal’s statement, Altech has taken this on appeal and review to the Competition Appeal Court.
However, the tribunal said in its statement that the intervention “neither offered the tribunal what it promised nor achieved what Altech sought”.
The tribunal said that it understood its jurisdiction to award costs to be limited to party and party costs.
“Had we not suffered from this limitation we would have considered this an appropriate case to award punitive costs against Altech.”
According to the tribunal, on January 7—the day prior to the date set for the hearing—it received a notice of withdrawal from Altech.
“The notice of withdrawal contained no tender to pay the merging party’s costs in respect of the intervention application or the merger itself.”
The tribunal said that at the hearing it was advised by the merging parties that Altech had withdrawn its application after receiving a letter from MTN.
The tribunal said: “Altech’s withdrawal the day prior to the commencement would, absent anything else, justify the award of costs to the merging parties on that ground alone.”
The tribunal added that the original intervention application was open-ended about its concerns and concluded with “the pessimistic assumption” that the merger would result in incurable harm.
There was no inkling until the MTN letter that Altech’s chief concern was that it would face unfair discrimination and that a letter of comfort from MTN, let alone even a tribunal imposed condition to the same effect, would suffice, the tribunal said.
“What Altech has done is to seek intervention on an open-ended basis to have the merger prohibited by establishing that it was, at the least, concerned about the following issues: removal of a potential entrant; foreclosure of access to a customer base; input foreclosure of rival ISPs [internet service providers] and the VOIP [Voice over Internet Protocol] issue,” the tribunal said.
Having obtained the right to intervene on those grounds, and putting the merging parties to the burden of dealing with those issues, it filed unsigned witness statements.
These statements dealt with the potential for MTN to use its post-merger control of Verizon’s international gateway for data transmission into South Africa to impede the development of VOIP/LCR (local continuous replication), the tribunal said.
“The merging parties never dealt with this issue in their witness statements because they said the issue was not one raised in the intervention application.”
The tribunal said that although they addressed the VOIP problem raised by Altech in its founding papers, the VOIP theory of harm addressed by Altech in its witness statements on December 29 was “an entirely novel one”.
This meant that the merging parties’ economists had to file a supplementary report to deal with this issue.
“Altech knew that the issue of costs for the intervention application had been reserved, and that it had no agreement with the merging parties on the issue of costs,” the tribunal said.
“It ought to have known that the issue of costs would as in the normal course, be disposed of at the hearing of the merger and that if it wanted to be heard on the issue it would need to appear at the hearing,” the tribunal said.
However, Altech “chose not to do so”.
Nor did its attorneys at the time of filing the notice of withdrawal request to be heard on this issue, the tribunal said.
“On the merits of the costs award there can be little doubt that the merging parties were entitled to their costs,” the tribunal said.—Sapa
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