HK Telecom faces fresh claims of unfair play

PUBLISHED : Sunday, 13 September, 1998, 12:00am
UPDATED : Sunday, 13 September, 1998, 12:00am

HONGKONG Telecom is facing allegations of illegal predatory pricing just two months after being fined and giving an undertaking not to continue the practice.

The Government is investigating at least two complaints that the company is undercutting its legally approved price list in an attempt to beat its three smaller rivals, sources say.

Documents seen by the Sunday Morning Post indicate one customer who paid the listed prices was subsequently given a rebate cheque in August of more than $10,000.

It is understood that one complaint alleges some customers have been given free or cheap maintenance on their office switchboards - worth hundreds of thousands of dollars a month - in exchange for agreeing not to use competing firms.

Other services are also being offered at a discount to those agreeing to use only Hongkong Telecom IDD services.

In June, the South China Morning Post revealed the firm was engaged in widespread illegal anti-competitive practices, which the company then denied.

But three weeks later, the Office of the Telecommunications Authority (OFTA) published a ruling that the firm was engaged in 'anti-competitive practices' on a wide scale and ordered it to collect extra cash from customers who had used cut-price services.

The firm was also fined the legal maximum - only $20,000, a figure described as 'peanuts' by Democratic Party legislator Sin Chung-kai.

Senior acting director of telecommunications Au Man-ho confirmed that complaints had been received from rival firms.

But he added: 'So far we have not drawn any conclusions.' A Hongkong Telecom spokesman said: 'We have pledged to comply with the OFTA ruling of June 29.' He said he knew of no legally approved discount scheme under which customers could receive cheque rebates.

Hongkong Telecom is sitting on $15 billion given by the Government as compensation for ending its international monopoly at the end of this year.

Rivals allege the firm wants to use the cash mountain to slash prices and starve them of customers - and then raise prices when they retreat from the market.