No Go for Vodacom-Maziv Merger: Competition Tribunal Notes Consumer Data Affordability Concerns
South Africa’s Competition Tribunal has cited its reasons from prohibiting the Vodacom’s Maziv acquisition, citing long-term harm to competition.
The Competition Tribunal (“Tribunal”) has today issued its reasons for prohibiting the proposed transaction since its order, issued on 29 October 2024. In terms of the proposed transaction Vodacom (Pty) Ltd (“Vodacom”) intends to acquire 30%, and potentially 40%, of the issued share capital of Maziv (Pty) Ltd (“Maziv”), previously called Business Venture Investments No 2213 (Pty) Ltd (“the proposed transaction”). Vodacom and Maziv collectively are referred to as “the merger parties”.
In its reasons the Tribunal ultimately concluded:
The proposed transaction’s anti-competitive effects will be permanent. The merger-specific public interest benefits of the proposed transaction, on the other hand, are limited in duration and do not outweigh its negative competition effects that relate to various relevant markets and that will ultimately impact millions of South African consumers that will increasingly in the future be making use of data/internet services.
– Excerpt from The Competition Tribunal’s Announcement
The proposed transaction relates to various markets that impact access to the internet/data and future pricing, and has implications for millions of South African consumers that, now and increasingly in the future, require access to affordable data and internet services.
The Tribunal notes:
The subject matter involves a very important service – data/internet services and their future costs to millions of South African consumers. 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. Moreover, the implications for the public arising from this proposed merger are 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.
– Excerpt from The Competition Tribunal’s Announcement
The Compettion Tributnal noted that the analysis, after considering the factual and economic evidence, has found that the public interest benefits claimed by the merger parties are to a very large extent not merger-specific for a number of reasons, including that certain commitments made already form part of Vodacom’s various licencing obligations, are part of previous conditions imposed by the Tribunal in a merger, or will occur regardless of the proposed deal when considering the factual evidence relating to inter alia market characteristics and dynamics. Thus, although the merger parties tendered inter alia public interest commitments we, based on the evidence, found:
Therefore, a very large part of the benefits that the merger parties claim will result from the proposed transaction and their commitments, are, based on the factual evidence, in fact not merger-specific. Thus, the public interest benefits are substantially lower than claimed.
– Excerpt from The Competition Tribunal’s Announcement
After considering all the factual and economic evidence, including the merger parties’ internal strategic documents, the Tribunal found both horizontal and vertical competition concerns in relation to several relevant product/service markets, as we explain in more detail below .
