Competition Tribunal fails to deliver in Vodacom-Maziv deal

Nearly four months since the Competition Tribunal blocked Vodacom’s proposed acquisition of a 30% to 40% stake in Vumatel parent Maziv, the watchdog has yet to release the detailed reasons for its decision.

Without the reasons document, an appeal from the merging parties and the South African Minister of Trade, Industry, and Competition, Parks Tau, cannot proceed.

This has led to speculation that the Tribunal is intentionally dragging its feet, or has been scrounging around for reasons to help bolster its case because it knows the appeals are coming.

The process to obtain approval for the transaction has been protracted, and mergers and acquisitions experts have warned that it sends a negative message to international investors regarding large corporate deals in South Africa.

In other words, delays like these tell the world that South Africa is not business-friendly, despite assurances from President Cyril Ramaphosa and others to the contrary.

Ramaphosa has led a drive for the private sector to invest R2 trillion in South Africa by 2028. Vodacom pledged to invest R60 billion over five years at the president’s Investment Conference in April 2023.

The Competition Tribunal’s dithering could be putting this at risk.

South Africa’s competition authorities took three years to reject the Vodacom-Maziv deal, and now they are even denying the parties the courtesy of a swift appeal.

Vodacom announced in November 2021 that it had entered into a deal to buy a stake in the fibre assets of Community Investment Ventures Holdings (CIVH), which owns Vumatel and Dark Fibre Africa (DFA).

CIVH, in turn, is majority-owned by Remgro, which has an effective 57% stake in the business.

The initial deal was for a 30% share, with the option for Vodacom to increase its stake to 40%.

After nearly two years of negotiations, which resulted in a voluminous set of conditions being proposed for the transaction, the Competition Commission rejected the deal.

It recommended to the Competition Tribunal that the deal be prohibited on the grounds that it would decrease competition in South Africa’s fibre market.

The Tribunal then conducted an extensive series of public hearings that ran from May until the end of September. It announced its decision in October 2024.

The rules governing the Competition Tribunal and Competition Appeals Court stipulate that parties must lodge their appeals within a certain period after receiving a decision.

They also state that the Tribunal should release its reasons document within 20 business days after completing a merger hearing.

Competition Tribunal falling behind

When MyBroadband previously asked the Tribunal about its missed deadlines, it said the case was very complex.

“In a case such as the Vodacom/Maziv merger, that raises complex competition issues, with multiple theories of competitive harm, both horizontal and vertical,” a Tribunal spokesperson said.

“It also raises complex public interest issues, with inter alia effects on the particular sector and counterfactuals to consider. Therefore, it is not practical to issue reasons within a 20-business-day period.”

The Tribunal’s spokesperson noted that the hearing took place over 26 days, and that 19 factual and expert witnesses gave oral evidence.

“The record comprises at least 21,944 pages; the trial bundle comprises at least 14,307 pages (excluding other annexures and heads of argument); and the heads of argument filed by the various parties comprise 555 pages.”

With the reasons document not released by the time interested parties had to launch their appeals, Vodacom, Maziv, and Parks Tau instead filed their intention to appeal, pending the release of the reasons.

“The panel members are currently drafting the reasons and dealing with multiple cases other than the Vodacom/Maziv merger,” the Tribunal’s spokesperson said.

Other companies waiting on feedback from the Tribunal have also experienced unexpected delays.

One of these is Blue Label Telecoms, which has an application before the regulator to take a controlling stake in Cell C after injecting billions of rands into the business.

Blue Label co-CEO Brett Levy recently told journalists that the approval from the Competition Tribunal was taking much longer than anticipated and was the final hurdle in the regulatory process.

MyBroadband asked Vodacom, Maziv, Remgro, and the Competition Tribunal for additional comment on the delays.

“The reasons for the decision have not yet been published and Maziv has unfortunately not been informed as to the date when these reasons will be published,” said Maziv’s group head of communications, Suveshnan Arumugam.

“The Competition Tribunal announced their decision on 29 October 2024 and by its own rules would have had to publish written reasons for its decision within 20 business days of making the decision,” Arumugam continued.

“We are awaiting the publication of a detailed report with the reasons for their decision.”

Arumugam said they expect the Tribunal’s reasons will be published as a matter of urgency.

“This would serve the public interest and enable the merging parties to thoroughly assess the decision,” he said.

“Maziv remains of the view that the merger would be highly beneficial for the country, especially lower-income households, in terms of fibre infrastructure investment, job creation and SMME development.”

Arumugam said they believe the transaction would greatly contribute to bridging the digital divide and providing affordable internet access to all South Africans.

Vodacom and Remgro confirmed that they have yet to receive the Competition Tribunal’s rationale for prohibiting the transaction.

“Whilst there is a guideline in the Competition Tribunal rules that speaks to a period within which these would be provided, we do believe that the relative size and complexity of the record would have contributed to the current delay,” a Remgro spokesperson said.

Vodacom declined to comment further. The Competition Tribunal did not provide feedback by publication.