Vodacom and Maziv have agreed to revised conditions for their merger that aim to enhance competition, improve consumer access to broadband, and strengthen public interest commitments.
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The South African Competition Commission has announced a significant development in the merger between Vodacom (Pty) Ltd and Business Venture Investments no 2213 Proprietary Limited (Maziv).
After thorough discussions aimed at resolving previous competition concerns, the Commission has reached an agreement on revised conditions that address key issues identified during the initial assessment of the merger, which the Competition Tribunal had recommended to be prohibited.
The revised conditions offer solutions to three primary competition concerns raised by the competition watchdog.
The first concern pertains to the horizontal reduction in competition between Fixed Wireless Access (FWA) and Fibre to the Home (FTTH) services. Initial commitments made by Vodacom regarding the rollout of 5G and competitive pricing for FWA were deemed inadequate.
The revised agreement significantly enhances the commitment from Maziv to invest in infrastructure over a five-year period following the merger, ensuring that third-party network operators have the opportunity to access services at competitive prices. Moreover, the merger parties are now required to not only improve coverage but also commit to meaningful connections, thereby strengthening competition in the sector.
The second concern revolved around the potential overlap in FTTH infrastructure and the risk of price increases post-merger. The previous divestiture provisions were found lacking; however, the new conditions introduce a robust divestiture mechanism. Should the merged party fail to sell overlapping assets within a set timeframe, a trustee will be appointed to ensure compliance and maintain competition by restoring pre-merger market dynamics. This mechanism promises a transparent and competitive process to identify potential buyers.
Lastly, the revised conditions tackle vertical foreclosure concerns that could hinder competition in the market. Although previous provisions included measures to prevent foreclosure, the Commission highlighted challenges in monitoring compliance effectively. The new agreement introduces structural changes to Maziv's governance that limit the merged entity’s ability to disadvantage competitors. Additionally, an enhanced fast-track interim relief process will allow for quicker intervention against any potential attempts of anti-competitive behaviour.
The agreement also significantly increases public interest commitments. It includes additional capital expenditure for extending fibre infrastructure and mandates free access to high-speed fibre lines for public libraries and clinics served by FTTH. Other commitments entail providing Fixed Wireless Access products to more police stations, further enterprise development initiatives, and an expanded employee share ownership plan, reflecting a comprehensive approach towards fostering greater inclusivity and social responsibility.
“Access to reliable, high-speed internet is the cornerstone of a dynamic economy and a democratic society. The Commission is confident that the revised conditions agreed with the merger parties will ensure that South Africa will benefit from continued competitive prices and product choices in this critical sector,” stated Commissioner Doris Tshepe.
The matter now advances to the Competition Appeal Court, where the Commission will present its case on how these enhanced conditions rectify the initial concerns raised regarding the merger.