The Commerce Commission is investigating an alleged breach of the separation undertakings by Telecom's Wholesale business unit.
Last week the watchdog group, Independent Oversight Group (IOG), released a report saying two Telecom loyalty offers constituted a breach of its undertakings.
The Commission says it has also received several complaints on the same matter.
Its investigation will consider whether there is a breach of the undertakings and it will seek the views of Telecom Wholesale and complainants before reaching a decision, due in October.
In the event that a breach of the undertakings has occurred, the High Court may issue remedial orders and/or monetary penalties, of up to $10 million.
The Commission says it has also received a complaint regarding the same loyalty offers under the Commerce Act but has not decided whether to hold a separate inquiry under the act.
Under the loyalty programme, Telecom Wholesale offered customers discounts if they gave it at least 90% of their business.
The IOG review was sparked by complaints from telecommunications firms Kordia and Vodafone.
Following its release on Thursday, Telecom Wholesale chief executive Matt Crockett announced that the loyalty offers would be removed as soon as practicable.
He said the review was the first guidance on some complex
operational separation rules so its decision was important.
