The Competition Commission (Commission) has reversed its earlier recommendation to prohibit the merger between Vodacom and Maziv, following the parties’
The Competition Commission (Commission) has reversed its earlier recommendation to prohibit the merger between Vodacom and Maziv, following the parties’ agreement to a set of revised conditions. These changes, the Commission says, address the concerns about reduced competition and public interest implications, paving the way for the merger to proceed unopposed to the Competition Appeal Court.
In a statement, the Commission confirmed that the new commitments resolve key issues it previously raised in its recommendation to the Competition Tribunal.
Key Concerns and Revised Conditions
Competition between Fixed Wireless Access (FWA) and Fibre to the Home (FTTH). One of the main concerns was the reduction in competition between FWA and FTTH. Under the revised terms, Vodacom has committed to rolling out FWA in areas where it has deployed 5G infrastructure, with pricing set to remain competitive. Maziv will increase its capital expenditure (capex) commitment, extending it over five years post-merger, to ensure continued support for third-party network operators.
The new conditions also introduce enhanced coverage and connection commitments aimed at promoting competition between FTTH and FWA. To meet these targets, the parties will be required to price services competitively. Additionally, both parties have committed to maintaining affordable broadband packages in the market.
Horizontal overlap in FTTH infrastructure and potential price increases post-merger. To mitigate concerns around FTTH infrastructure overlap and the potential for post-merger price hikes, a standard divestiture mechanism will be put in place. Should the merging parties fail to divest specified assets within a given timeframe, a trustee will oversee the process to ensure that divestitures occur and pre-merger levels of competition are restored.
Vertical foreclosure risks. Addressing vertical foreclosure concerns, the revised conditions include structural changes to Maziv’s governance framework to reduce the incentive for the merged entity to disadvantage rivals. An enhanced fast-track interim relief mechanism will now be available to address any immediate foreclosure issues while longer investigations are carried out. This mechanism is designed to prevent first-mover advantages that could lead to long-term market distortions.
The revised merger conditions also reflect significant enhancements to public interest commitments. These include:
Additional capex to roll out new Fibre-to-the-Business (FTTB), FTTH, and Fibre-to-the-Site (FTTS) infrastructure
Free access to 1 Gigabyte fibre lines for public libraries and clinics located along FTTH routes
An increase in the number of police stations to be connected by Vodacom to FWA products
Expanded enterprise development initiatives
An enhanced employee share ownership plan
“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 the continued competitive prices and product choices in this critical sector,” said Commissioner of the Competition Commission, Doris Tshepe.
With these revisions in place, the merger will now proceed to the Competition Appeal Court unopposed. The Commission will present the updated commitments to the court, demonstrating how the changes address its earlier concerns.
Lungile is the Digital Editor for TechAfrica, with a knack for storytelling, technology and innovative ideas. Working with TechAfrica, she takes simple ideas and turns them into amazing stories.
Lungile Msomi
