The Competition Commission has warned that Vodacom's proposed 30% acquisition of Maziv, which manages fibre providers Vumatel and Dark Fibre Africa, will reduce competition.
The Commission also argued that the merger would in addition cause irreparable structural damage to the broadband market.
The watchdog said that the merger would lead to an entity that could have the ability and the incentive to engage in anti-competitive conduct.
This behaviour could have irreversible consequences on the market, and the Competition Commission has argued that the R13 billion merger should not happen.
Advocate Daniel Berger, on behalf of the Competition Commission, said in his opening statement yesterday at a Tribunal hearing that competition is better than regulation.
"Competition is much more preferable to regulation. The proposed transaction, if implemented with the recommended conditions, will take us back more than if we had competition," he added.
The lawyer warned that Vodacom would have too much power as it would have effective operational control over the combined entity.
“It’s crucial to note that the structural changes and subsequent harm, if allowed, will be irreversible,” Berger warned.
“The Commission also contends that there are no substantial public interest benefits or efficiencies arising from post-transaction that outweigh the competition harm that has been identified. The commission contends that it would be against public interest to permit the proposed merger,” he added.
The lawyer said that this deal would also impact poor South Africans in obtaining access to fibre.
Berger said that the poor will lose out because such a merger will concentrate fibre in the hands of one large company.
“The merging parties are asking to take us backwards,” he emphasised.
Another lawsuit
This is not the only lawsuit Vodacom is facing. The company is in a bitter battle with Please Call Me inventor Nkosana Makate.
Last week, the telecommunications giant informed shareholders that it could be forced to pay Makate around R29 billion.
Vodacom confirmed that if the Supreme Court of Appeal (SCA) majority judgment is upheld they could be forced to fork out the multi-billion rand settlement.
Vodacom is currently appealing the SCA judgment at the Constitutional Court.
In their latest financial statement, Vodacom said the SCA majority judgment, which has effect, would entitle Makate to a minimum compensation amount of R29 billion. It also noted that the minority judgment of the SCA, which was a dissenting judgment with no effect, raised Makate’s compensation to approximately R186 million.
“Consequently, the range of the possible compensation outcomes in this matter is very wide. The amount ultimately payable to Makate is uncertain and will depend on the determination of the Constitutional Court to grant Vodacom’s application for leave to appeal, and if granted, on the success of Vodacom‘s appeal against the judgment and order of the SCA, on the merits of the case,” Vodacom added.
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