New Zealand Commerce Commission said Friday it has reached a NZ$1.6 million settlement with Telecom Corp of New Zealand Ltd. (TEL.NZ) over so-called loyalty offers.

The settlement follows a Commerce Commission investigation launched after receiving complaints from the telecommunications industry alleging that Telecom Wholesale's "loyalty offers" breached Telecom's Separation Undertakings.

The loyalty offer related to Telecom Wholesale's regulated wholesale broadband service, used by competing service providers to provide broadband service to retail customers.

Telecom offered substantial discounts in return for a commitment from the service providers to maintain current and future customers on Telecom Wholesale's service rather than that of a competitor.

Under the terms of the Separation Undertakings, Telecom is barred from discriminating between or against its wholesale customers. The Commerce Commission's investigation concluded the offers were likely to constitute breaches.

The NZ$1.6 million will be shared between complainants Vodafone Group PLC's (VOD, VOD.LN) local unit and Orcon.

-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com
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