Bezeq appeals to Supreme Court against NIS 8.5m fine

Bezeq

Bezeq is seeking to avoid a ruling that it tried to prevent the wholesale landline telephony market reform.

Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) is appealing the dismissal of its petition against the NIS 8.5 million fine imposed on the company by the Ministry of Communications for acting against the wholesale landline telephony reform. The Ministry of Communications imposed the unprecedented fine for Bezeq's actions at the beginning of the reform aimed at promoting competition in the landline communications market.

Bezeq's appeal of the fine to the Tel Aviv Court for Administrative Affairs was dismissed, and the company is now appealing the dismissal to the Supreme Court in its function as an Appeals Court of Administrative Affairs. Bezeq is requesting either the reversal of the ruling or a reduction in the fine.

The substance of the appeal concerns the interpretation given by the court in the dismissal of Bezeq's petition. Bezeq alleges that the Ministry of Communications acted with a lack of binding fairness by materially changing Bezeq's work rules and agreements with Internet providers hours before the reform took effect in 2015. Bezeq claims that it had been unable to comply with the changes mandated by the Ministry of Communications on such short notice, because the reform was the most comprehensive ever in the communications market, and required thorough preparations on the company's part, which it has indeed made.

The court dismissed this argument, and in its appeal to the Supreme Court, Bezeq is trying to convince the court that this was a breach of fundamental fairness, because a few days after the reform went into effect, the Ministry of Communications conducted an audit of Bezeq in the midst of its effort to comply with the ministry's changing demands.

In its appeal to the Supreme Court, Bezeq asserts that the court erred in ruling that the Ministry of Communications had acted properly and proportionately in hearing Bezeq's position, and had consulted the advisory committee before imposing the fine. According to Bezeq, the Ministry of Communications' consultation with the committee was illegal, and the court ignored this. Bezeq alleges that there was no real consultation between the Ministry of Communications director general and the committee, and that the argument that the advisory committee lacks authority to set the amount of the fine does not exempt it from the duty to hold a substantive discussion on the question of whether any fine whatsoever should have been imposed, and whether the fine imposed was high and disproportionate.

Both Bezeq's original appeal and the appeal to the Supreme Court reflect the company's feeling that it has been the victim of injustice, because the Ministry of Communications admitted, and still admits, that the reform in the wholesale landline communications market that the ministry formulated was an enormous success. Bezeq quoted then-Ministry of Communications director general Avi Berger as saying that the reform was a great success and would continue. Bezeq says that the numbers speak for themselves, and that there are currently more than 500,000 wholesale market customers.

On the other hand, Bezeq "forgot" to mention that a large proportion of those 500,000 customers are Bezeq customers - either wholesale customers of Bezeq International Ltd. or customers of Internet providers used cleverly by Bezeq to connect the customer to it and compete with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL).

For the Ministry of Communications, the fine imposed on Bezeq provided that it acted objectively towards the company, and was not trying to make things easier for it. Ministry of Communications director general Shlomo Filber, who replaced Berger, also argued in the appeal that the decision not to cancel or reduce the fine was important for governmental continuity, and that he acted in cooperation with Bezeq in order to avoid fines of supervised companies whenever possible.

The Ministry of Communications welcomed the dismissal of Bezeq's appeal. The ruling came as welcome relief for the ministry, following the harsh accusations against it that resulted from its activity on behalf of Bezeq during Filber's term as director general.

Both sides regard the appeal as a case of honor. Bezeq's executives regarded the company's appeal as a way of clearing the company's name of accusations that it thwarted competition, and still do.

Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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