The Competition Commission has recommended that the Competition Tribunal prohibit Vodacom’s proposed purchase of a 30% stake in Maziv.
This follows the agreement, in November 2021, for Vodacom to acquire a co-controlling interest in all of the material assets owned by Community Investment Ventures Holdings (CIVH), including Vumatel and Dark Fibre Africa (DFA).
Upon completion, Vodacom would hold a 30% co-controlling interest in a newly formed entity Maziv the open access fibre infrastructure company that operates Vumatel and Dark Fibre Africa and the fibre assets which Vodacom will contribute into Maziv,.
In a statement released on Tuesday (8 August), Vodacom states that it is “surprised and disappointed with the Competition Commission’s recommendation, given that both Vodacom and CIVH have endeavoured to thoroughly address competition related concerns through a list of remedies and public interest commitments put forward to the Competition Commission.
“Though we are disappointed, it is important to note that the Competition Commission’s recommendation is not the end of the process,” it states. “Instead, the next step is for the proposed transaction to be presented to the Competition Tribunal. This would have been the case even if the Competition Commission were to have recommended the proposed transaction for the Competition Tribunals approval.”
The Competition Tribunal is an independent adjudicative body and is one of three independent authorities established in terms of the Competition Act. These are:
* The Competition Commission, which is the investigative and enforcement authority;
* The Competition Tribunal, which adjudicates on matters referred to it by the Competition Commission; and
* The Competition Appeal Court, which considers appeals or reviews against Tribunal decisions.
“Looking forward to the process with the Competition Tribunal, Vodacom intends to showcase the strong public interest and pro-competitive advantages that the proposed transaction would have on the fibre market, and the country as a whole,” the company states.
“In Vodacom’s view, the proposed transaction will in fact help bridge the digital divide and enhance competition in the fibre market as the parties have made a firm commitment to ensuring access to Maziv’s fibre assets – including Vodacom’s fibre assets contributed as part of the transaction – will be made available through an open access, non-discriminatory pricing model.”
Responding to the recommendation, CIVH and Maziv state: “CIVH remains committed to the transaction. We firmly believe that the transaction will deliver substantial benefits to both the South African consumer and the economy. Vodacom’s planned investment in excess of R10-billion holds particular significance as a considerable proportion will be focussed on developing new fibre infrastructure at a time when attracting capital investment is particularly challenging.
“The transaction will be hugely beneficial to the market in that Vodacom fibre assets will, as a result of the transaction, become commercially available on an open access, transparent and non-discriminatory basis. In addition, the investment will enable Maziv to extend fibre infrastructure to an estimated 1 million new households in lower income areas, create up to 10 000 new jobs, commit at least R10 billion to capital expenditure, and facilitate the creation of small to medium enterprises through a fund formed specifically for this purpose with R300-million of committed capital.”
The companies point out that, during the Commission’s 18-month investigation, both merger parties committed to extensive and robust engagement with the Commission. “We believe that all concerns raised by the Commission during this process can be adequately addressed by a range of conditions and commitments proposed by the parties.”