The Competition Commission has decided not to prosecute Vodacom and MTN following a complaint by Cell C that its two bigger rivals had acted anticompetitively.
The case goes all the way back to October 2013, when Cell C — then still headed by Alan Knott-Craig — filed a complaint at the commission, accusing its larger rivals of anticompetitive behaviour.
“The crux of the complaint relates to the manner in which the dominant incumbents discriminate between their on-net and off-net effective prices, which has a dramatic and direct impact on smaller operators’ ability to acquire new customers,” Cell C said at the time.
“The two dominant incumbents discount their effective on-net prices substantially while charging a premium for their customers to call off-net. This amounts to discriminatory pricing and is without doubt anticompetitive when adopted by dominant operators,” Knott-Craig said when the Cell C complaint was lodged with the commission.
“Customers that call off-net are being penalised often without them realising it. With number portability, customers don’t always know if they are calling on- or off-net anymore, so they don’t actually know what rate they are paying,” Knott-Craig said.
Cell C said in its statement that in “many mobile markets around the world, regulators are opposed to differential on-net and off-net pricing, and in some instances, dominant mobile network operators are facing stiff fines for this kind of discriminatory pricing, which locks in customers and prevents switching”.
But the Competition Commission has now decided, after years of investigation, not to prosecute MTN and Vodacom, saying there is insufficient evidence to prosecute a case successfully, it said.
“This decision follows a lengthy investigation which revealed that there were several features in the mobile telephony market which affect the ability of smaller mobile operators to compete.”
The commission found that it would be unlikey to succeed in a prosecution of the specific conduct that is the subject of Cell C’s complaint.
“However, there is evidence to suggest that this conduct and other features of the market, in particular the price differentials applied for on-net and off-net calls, as well as long-term subscribers’ contracts, have made it difficult for late entrants such as Cell C to compete effectively,” it said.
“There is therefore a need to look broadly into the state of competition in the mobile telephony market in South Africa, specifically at the retail level, as the market is still dominated by two mobile market players, years after the licensing of Cell C and Telkom Mobile. In this regard, the commission will engage the Independent Communications Authority of South Africa to explore regulatory interventions that may be necessary to make the market competitive.”
The commission did not say what these regulatory interventions might entail.
For its part, Cell C said it will not “self-refer” the matter to the Competition Tribunal.
“Cell C appreciates that this matter was extremely complex, as evidenced by the extensive period of time required by the commission to investigate the complaint,” it said in a statement.
“The company is encouraged by the Competition Commission’s acknowledgment that this pricing model made it difficult for new entrants to compete effectively and that there is a need to look at the state of competition in the mobile market generally,” it said. — (c) 2017 NewsCentral Media
