Consumer Protection eBrief – 17/07/2013

17 July 2013|In Consumer Protection Act Briefs

In this issue:

  • South Africa: Criminal charges laid following electricity tariff increase
  • European Union: Competition authorities search top telecom companies following complaint
  • Australia: $200,000 penalty for overcharging customers

 

South Africa: Criminal charges laid following electricity tariff increase

Criminal charges have been laid against Cape Town mayor Patricia de Lille over higher electricity tariffs that came into effect during the first week of July 2013. Charges of corruption and theft had also been brought against mayoral committee member for finance Ian Neilson, and the city manager Achmat Ebrahim.

The charges were laid following a tariff increase for users in the 350 to 600 kWh a month category by 56%. It is alleged by National advocacy director of Consumer Fair, Imraahn Ismail-Mukaddam, that the increase is 500 percent more than the increase allowed by the National Energy Regulator of South Africa (“Nersa”). In responding to the charges, the city’s Priya Reddy said that the new tariffs had been approved by Nersa and that Ismail-Mukaddam had not “fully understood the complexity” of the tariff structure and the provision of free basic electricity. Reddy went on to explain that the tariffs were adopted by the council, and not by the mayor or the city manager or any other individual.

Cape Town has two possible tariffs available for domestic consumers, which are applicable whether supplies are metered by credit or prepaid. There is the domestic tariff, which is applicable to customers who receive more than 450kWh a month on average. The other is the lifeline tariff, which is highly subsidised and aimed at customers who receive an average of 450kWh or less a month. It is alleged by Ismail-Mukaddam that the increase is an attempt to push poorer communities to switch to the domestic tariff so that they could subsidise the more affluent higher users.

The cases were opened at the Cape Town Central Police Station.
 


European Union: Competition authorities search top telecom companies following complaint

11 July 2013, telecommunication companies Deutsche Telekom, Spains Telefonica, and France’s Orange, inter alia, were raided by the European Commission (the "Commission”) officials over competition concerns following a complaint by a US competitor.

The Commission said that it was looking for evidence that the companies had abused their dominant market positions for internet services, as former monopolies are alleged to still exercise control over large parts of the EU’s internet infrastructure. The Commission has said that it wants to give all Europeans access to internet speeds of more than 30 megabits per second (“Mbps”) and connections faster than 100Mbps by 2020. However, in a letter to the Commission, industry association Ento wrote to the Commission and said that “The European industry is losing revenues and overall market capitalization is shrinking, in stark contrast with the US and East Asia”.

France’s Orange has commented that “[they] are confident about the eventual outcome of the matter, given that the French Competition authority decision regarding Cogent, which exonerated our group”. Germany’s Deutsche Telekom spokesman Phillip Bank said that the company was “astonished” by the raid and maintain their innocence.
 


Australia: $200,000 penalty for overcharging customers

The Federal Court (the "Court") has ordered former Tasmanian Europcar franchisee, BAJV Pty Ltd (“BAJV”), to pay a $200,000 civil pecuniary penalty for deliberately overcharging customers for hire vehicle repair costs and failing to refund overcharged customers. The Court also ordered BAJV director Brendon Ayers to pay a $40,000 civil pecuniary penalty for being knowingly concerned in the conduct.

The Court found that BAJV and Ayers had charged customers for hire vehicle damage based on inflated estimated repair costs and failed to refund customers the overcharged amount once repairs had been completed, despite being aware of the actual lower cost of the repairs. The Court further found that BAJV’s offending conduct included obtaining two repair invoices for the same vehicle, paying the repairer the actual cost price and then submitting the inflated invoice for payment to customers and to third party motorists.

In addition to the monetary penalties imposed, the Court also made orders including declarations, costs and a publication order in terms to be agreed.

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