The Competition Tribunal says it blocked the proposed merger of Vodacom’s fibre assets with those of Dark Fibre Africa (DFA) and Vumatel as the transaction’s anticompetitive effects would be permanent and implications for the public far-reaching.
Vodacom planned to acquire a 30% shareholding in Maziv, which owns DFA and Vumatel, and sell its fibre assets to Maziv. Vodacom would have had the option to subscribe for additional shares, which would increase its shareholding in Maziv to 40%. However, after investigations, the Competition Commission recommended the tribunal prohibit the merger. The Tribunal announced its decision to block the merger in October last year and only released its reasons on Friday.
During the commission's investigations, a number of industry players raised concerns about the proposed merger. The Internet Service Providers’ Association, which represents 204 members, raised concerns that the proposed transaction would change the structure of the fibre market in South Africa which constitutes a material risk to the ability of its members to compete in the retail market for the delivery of internet access and related services.
Our decision bears heavily on us since it has implications for the millions of South African consumers that now and increasingly in the future require access to affordable data and internet services
— Competition Tribunal
The tribunal said the proposed transaction relates to various markets that impact access to the internet/data and future pricing.
“Our decision bears heavily on us since it has implications for the millions of South African consumers that now and increasingly in the future require access to affordable data and internet services,” it said.
The tribunal said the implications for the public arising from this proposed merger were “far-reaching in that they flow well beyond just the telecommunications sector itself since the end-customers that require access to affordable data/internet services, and the medium and longer term future costs of these services, affect the millions of South African consumers and all sectors of the economy that make use of such services.”
If the merger were to be implemented, all the pro-competitive benefits of future competition from Vodacom (and potentially others), seen by Maziv as a massive threat to its businesses with impacts on its pricing, would be lost.
“We concluded that the proposed transaction, which eliminates Vodacom as a future competitor, will substantially lessen future dynamic competition in metro fibre and FTTB (fibre to the business) to the ultimate detriment of South African consumers.”
Vodacom and Maziv are appealing against the tribunal's decision.
Business Times
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