Bahamas Telecommunications Company (BTC) has been fined $243,442.76 by the telecoms regulator for allegedly abusing its dominant market position and has been ordered to adjust its behavior within 30 days or face further penalties.
The Utilities Regulation and Competition Authority (URCA) announced the fine and further demands placed on BTC yesterday during a press conference, during which it released an order outlining its findings and decision with respect to a complaint made against the company by SRG, a subsidiary of Cable Bahamas.
Stephen Bereaux, URCA's director of policy and regulation, said: "The purpose of the fine is to ensure that conduct of this sort, which is harmful to competition, isn't repeated and doesn't take place in the market. It is intended obviously to remove the incentive for operators to engage in anti-competitive behavior."
The fine represents a basic amount based on the provisions of the Communications Act, plus a number of "adjustments upward" due to "aggravating circumstances" perceived by the regulator.
SRG's complaint, made on April 2, 2012, alleged anti-competitive behavior and an abuse of a dominant position by BTC. This was said to have been manifested in the fact that BTC had secured exclusive supply agreements with certain wholesale businesses which prohibited those suppliers from selling SRG calling cards.
As a result, SRG said it had been restricted in its ability to display and sell SRG's "IndiGo" calling card since March 2012 through certain wholesalers.
In its order, URCA requires BTC to "immediately cease and desist" from such anti-competitive actions, specifically the use of "single branding agreements which (have) the effect of preventing, restricting or distorting competition".
URCA said that BTC must amend its current master distributor agreement, submit copies of the amended agreements to URCA within 14 days and notify all of its suppliers of the amendment. Within 30 days, BTC must provide a letter detailing its compliance to URCA and pay the fine.
Calculating the fine
Finding that BTC's infractions of the Communications Act were "sufficiently serious" to warrant a fine, URCA's adjudication states that the fine was determined based on a consideration of the gravity of the infringement and the relevant turnover of BTC for the product affected by the infringement.
Adjustments up or down were made depending on how long the infringement went on for and any other "aggravating or mitigating factors".
The regulator notes that based on information submitted to it by BTC for the purpose of calculating the company's communications and annual URCA fees, BTC's relevant turnover for the period March 2012 to March 2013 is approximately $338.29 million, meaning that under the act, the "maximum possible fine" that could be imposed is $33.82 million.
It added: "However, URCA accepts the gross revenue earned by BTC for its international calling card between March 2012 and December 2013 is $2,116,945, as submitted to URCA by BTC under URCA's investigation into this competition complaint, and therefore the possible fine of 10 percent of BTC's relevant turnover would be disproportionate to the infringement."
URCA then determined that an "appropriate starting point" for the fine would be 10 percent of the aggregate of the gross revenue for two-stage LD (long distance) calling cards earned by BTC over the "infringing period" of March 2012 to December 2013, or $211,694.95.
URCA adjusted the fine upward by 10 percent of the
basic amount - $21,166.45 - in light of BTC's continuation of the infringement after URCA initiated its investigation into the complaint, but then lowered it by five percent of the basic amount in light of being satisfied by BTC's cooperation during the investigation.
However, overall URCA said that BTC "did not go beyond its legal obligation to enable the enforcement investigation to be concluded more timely and effectively" and therefore the regulator did not reward the company in this regard in terms of the fine imposed.
Turning to any "adjustments for policy objectives" to the initial fine amount, URCA found that, "the material harm and financial loss to competition in the electronic communications sector in The Bahamas (and consumers) would potentially be significant, should the breaches of the kind committed by the licensee (BTC) not be deterred." For this reason, URCA again "adjusted upward" the penalty by 10 percent of the basic amount.
'Proportionate and appropriate'
The regulator said that it felt the resulting total fine of $243,442.76 is "proportionate and appropriate".
Bereaux said: "URCA is keen to ensure consumers do receive the full benefit of the competition we do have in the sector and going forward when additional competition is introduced, so it was important to address."
David Burrows, head of marketing for Cable Bahamas, said the company is pleased an order has now been made, but it is still assessing the implications for the organization.
Asked what level of revenue loss the anti-competitive behavior by BTC alleged by SRG, and now confirmed by URCA, had caused the company, Burrows said: "It would be significantly more than what the fine to BTC was."
BTC did not return messages seeking comment up to press time.
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