It’s many months late, but the Competition Tribunal has finally released its reasons document – or at least, a non-confidential version thereof – outlining why it decided to block Vodacom’s acquisition of a co-controlling stake in fibre operator Maziv.

The tribunal last October shocked the merging parties – and the telecommunications industry – when it announced it had agreed with the Competition Commission’s recommendation that the proposed multibillion-rand acquisition of Maziv, which owns Vumatel and Dark Fibre Africa, be blocked on competition grounds.

Vodacom, which has appealed the decision at the competition appeal court, had made an offer to buy 30% of Maziv – and possibly up to 40% of the business – to become a co-controlling shareholder alongside Remgro-controlled CIVH. The transaction was strongly opposed by a range of stakeholders, including internet service providers, which fretted about the impact on competition in South Africa’s internet access industry.

Key reasons cited by the tribunal for seeking to kill the deal include:

Elimination of a competitive threat: Vodacom was identified as a potential future competitor to Maziv in fibre. Its entry would have forced Maziv to respond on price and value, benefiting consumers.
Vertical foreclosure: Dark Fibre Africa holds a dominant position in the upstream dark fibre market (estimated 80-90% national market share for metropolitan dark fibre). The tribunal found that the merged entity would have both the ability and incentive to foreclose Vodacom’s mobile rivals by offering preferential terms, raising prices or degrading service quality.
Anti-competitive bundling: The merger would create opportunities for Vodacom to bundle mobile and fibre services, leveraging its large subscriber base and Maziv’s fibre infrastructure, potentially entrenching dominance and hindering competition.

Regarding public interest, the tribunal found that most claimed benefits, such as accelerated fibre roll-out and 5G deployment, were not merger-specific and would likely occur without the transaction due to Vodacom’s existing licensing obligations and market dynamics.

The tribunal concluded, too, that the tendered remedies, including a divestiture for fibre overlaps and behavioural conditions for open access and non-discrimination, were insufficient, inadequate and incapable of effective monitoring and enforcement.

Listen to an AI overview of the tribunal’s findings:

TechCentral journalists will be unpacking the findings document in the coming days. In the meantime, the AI-generated podcast overview of the nearly 400-page document (click play above) provides insight into some of the key findings. Please be aware that because it is generated by AI, there may be an occasional error of fact in the discussion as generative AI tools are still prone to “hallucinations”.

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