Antitrust Authority raids Bezeq offices

Management suspected of malpractice against competition.

May 24, 2006 06:37
2 minute read.
bezeq jerusalem 88 298

bezeq jerusalem 88 298. (photo credit: Ariel Jerozolimski)


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Investigators from the Antitrust Authority raided Bezeq headquarters Tuesday morning, suspecting the company's management of malpractice in its efforts to curb the competition it faces in the fixed line phone market. "We opened an investigation regarding recent events and practices by Bezeq," a source in the Antitrust Authority told The Jerusalem Post. "As competition only just started with HOT Telecom and other fixed line carriers, we are checking the behavior we have seen from Bezeq of blocking competition." Bezeq confirmed that various documents were collected by the investigators, including computerized material, and that a number of employees were asked to accompany the investigators to the offices of the Antitrust Authority for interrogation. "The company is cooperating fully with the Authority's investigators," Bezeq said. The Antitrust Authority source explained the investigation was in response to Bezeq workers cutting off HOT Telecom customers from calling the Bezeq network last week, but that it wasn't exclusively related to that incident. "There have been a series of events and HOT Telecom was one of them," the source said, "but we have seen other incidents of Bezeq trying to stop the competition." Bezeq workers refused to connect HOT subscribers for two days last week, in protest to the restrictions the company faces as part of the government's efforts to accelerate the entrance of Bezeq's competitors HOT, 012 Golden Lines, Globcall and Cellcom to the market. While Bezeq management distanced itself from strike, it could face criminal indictment or civil action, depending on the evidence found, the source explained. Until Bezeq loses more than 15% of the market, it is not permitted to offer discounts to entice new customers or offer bundled services with its Internet, cellular and satellite television subsidiaries. Hot has amassed 110,000 telephone customers with little marketing activity since starting service a year and a half ago. Richard Gussow, a senior analyst at Excellence Nessuah, said that with HOT's recent growth in its subscriber base, he expects Bezeq's market share to drop below 85% well within the next 18 months, which is "when the gloves come off," he said. Investors, meanwhile, appeared to be unconcerned with the investigation as Bezeq shares rose 1.4 percent to NIS 5.72 in Tel Aviv trading Tuesday. Gussow said that investors didn't expect any implications to come out of the government agency raids, citing similar occurrences which didn't amount to anything. The stock, he added, moved in line with the overall market. Furthermore, Gussow said he expects a strong first quarter from the company when it releases its results Wednesday. While he maintains his "buy" rating for the company, he stressed that competition was no longer an influencing factor on the stock and that internal structures at the company were of greater influence to investors. "It's all relatively meaningless until the new union agreement is signed which we expect to happen sometime in the summer," he said "That will allow the company to lay off many employees, probably in the thousands." New owners Apax-Saban-Arkin Group said it intended to implement major job cuts after buying control of the company from the government in May last year.

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