Communications regulator Icasa has been given a bloody nose in the high court in Pretoria after MTN South Africa took it on review, challenging provisions of the mobile broadband service regulations of 2021.
MTN disputed parts of the regulations that defined MTN – and rival Vodacom – of having “significant market power” and being “dominant” in the site access infrastructure, roaming and retail markets.
The consequence of being defined in this way by the regulator was that MTN and Vodacom were then obliged to submit reports to Icasa on their wholesale and retail tariffs.
High court judge Namhla Siwendu found that the methodology Icasa used to determine that MTN had significant market power was “legally flawed”, leading to errors in key definitions used in the regulations. Siwendu declared the regulations “irregular, unlawful and invalid” and subsequently set them aside.
“The finding … that MTN is dominant and has significant market power in the retail market is unreasonable and unlawful. It is tainted by the flawed determination of ineffective competition in the retail market and is based on outdated market data and irrelevant considerations,” said Siwendu.
The mobile broadband service regulations were introduced by Icasa in 2021 following a market research exercise that began in 2018. The intention was to define the mobile market and its sub-markets appropriately. Once defined, Icasa would thereafter “impose appropriate and sufficient pro-competitive licence conditions on licensees where there is ineffective competition”.
Court challenge
However, not long after the regulations were passed, MTN disputed aspects of the new rules, including how Icasa defined the retail, site access and roaming markets. MTN’s challenge cut across various areas, with the first category of arguments aimed at how Icasa fundamentally defined mobile markets and their various features.
MTN argued that the market definitions were irregular, unlawful and arbitrary. Regarding the site access market, for example, it alleged that Icasa excluded sites owned by non-licensees in its definition of the market. Furthermore, MTN alleged that Icasa did not perform a small but significant and non-transitory increase test commonly used to ascertain market dynamics. According to MTN, Icasa failed to consider factors relevant to the determination, on one hand, while it took account of irrelevant ones on the other.
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The second category of MTN’s challenge related to Icasa’s finding that the markets in question were ineffectively competitive. MTN argued that Icasa failed to consider aspects of the Electronics Communications Act relevant to the determination, allegedly also disregarding the “dynamic character and functioning” of each market.
Other themes shaping MTN’s challenge related to flaws in Icasa’s definition of “significant market power” and its determination that MTN had such power; how Icasa acted beyond the scope of its authority in imposing certain provisions in the regulations; and how Icasa contravened aspects of the Promotion of Administrative Justice Act.
Icasa argued in its defence that the court was not “required to test the correctness” of the findings made to determine the issues challenged by MTN as this would constitute an appeal and not a review. Judge Siwendu only partly agreed with this perspective.
“The conundrum of demarcating the scope of a review of a mistake or errors or finding of fact is more complex and nuanced than argued by Icasa. It must be considered in the context of the evolution of administrative law, the complex interplay between those facts and the grounds on which the review is brought,” she said.
The rest of Icasa’s arguments rested on the court deferring to the regulator’s authority as a mandated industry watchdog with the power to define markets and choose the route it sees best for doing so.
MTN confirmed it did not adhere to the regulations while the court case was ongoing, opting to await the legal outcome. Now that the regulations have been set aside, both MTN and Vodacom are no longer beholden to the reporting obligations set out in them.
Even if they had been adhered to, the impact of the regulations on competition in the mobile telecoms market was open to question. In a reasons document published by Icasa in April 2022, Telkom argued that the proposed pro-competitive remedies did “no more than impose additional reporting requirements” that would have had little to no impact on competition. Similarly, Cell C said the regulations seemed “too broad, too vague and too crude a measure to yield any real insights or results”.
ICT regulatory expert Dominic Cull said it is unlikely Icasa will appeal the court’s finding, especially since it was found to have made fundamental errors in developing the regulations. He said the Competition Commission was performing a data services markets inquiry at the time Icasa was doing its market research. The commission questioned Icasa’s approach to market definitions and even made suggestions that Icasa did not incorporate into its own work, he said.
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“It’s not that the court judgment is above criticism, but it certainly it looks like Icasa made some fundamental missteps – in particular, the failure to take into account what the Competition Commission was saying to them,” said Cull. – © 2025 NewsCentral Media
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