The Competition Tribunal has approved MTN’s acquisition of a majority 50% stake in Internet service provider Afrihost without attaching any conditions to the deal. The approval follows the recommendation last week by the Competition Commission that the deal be approved.
The commission found that MTN and Afrihost “do not appear to be direct competitors” because the latter focuses on small and medium enterprises as well as the residential market, whereas the latter focuses on large companies.
“For hosting services, the investigation shows that there are several large and reputable information communication technology companies such as Internet Solutions, Business Connexion Group, Gijima and Vox Telecom, among others, active in the hosting market that are alternatives for customers to switch to,” the commission said.
“In the market for Internet access (ADSL and mobile Internet connectivity), Afrihost is a relatively small player and competes with MWeb Connect, Vox, Telkom Mobile and Vodacom, among others.”
The commission recommended the deal be approved with conditions despite receiving objections to the transaction from competitors. These complaints related to the “potential exclusionary conduct” that could arise from the “vertical relationship between MTN as a wholesaler of ADSL and mobile data and Afrihost as its reseller”.
“The commission is of the view that in both the ADSL and mobile data markets, it is unlikely the merger will give rise to foreclosure effects that are harmful to small, medium and micro enterprises and residential customers, given the ability of these customers easily to switch mobile data service providers,” it said.
“In relation to the large corporates, since Afrihost does not provide services to these customers, MTN is already in a position to engage in such conduct before the merger,” it added.
“The concerns raised by third parties do not arise as a result of the merger and it is the commission’s view that the merger does not exacerbate this feature. Overall, the commission is of the view that the proposed transaction is unlikely to result in a substantial prevention and lessening of competition in the hosting, ADSL and mobile data markets.” — (c) 2014 NewsCentral Media
