Vodacom faces competition probe - TechCentral

Vodacom faces competition probe

Alan Knott-Craig has accused Vodacom and MTN of discriminatory pricing

Former Cell C CEO Alan Knott-Craig last year accused Vodacom and MTN of discriminatory pricing

Vodacom has revealed that the Competition Commission has decided to investigate a complaint lodged by Cell C, in which the smaller mobile operator has accused its larger rival of abusing its dominance in contravention of the law.

“The group received a complaint from the Competition Commission in which it is alleged that Vodacom South Africa abused its market dominance in contravention of section 8(a), 8(c) and 8(d)(i) of the Competition Act,” the operator says.

“Vodacom South Africa has received further communication that the screening phase has been completed and the Competition Commission will further investigate the complaint.”

Cell C filed complaints against both Vodacom and MTN in October 2013, accusing the two companies of engaging in anticompetitive behaviour. In the complaints, it argues that the two operators charge excessive prices to the detriment of consumers and engage in exclusionary acts, including acts that require or induce a supplier or customer not to deal with a competitor.

A Competition Commission spokesman wasn’t immediately able to say whether the commission has also decided to investigate MTN.

Cell C argues that MTN and Vodacom “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”.

When the complaint was filed, Cell C’s then-CEO, Alan Knott-Craig, argued that the two bigger operators “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,” said Knott-Craig.

“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.”

At the time, Vodacom spokesman Richard Boorman described it as “standard practice worldwide for companies to offer their customers lower priced calls when those calls are to other people on the same network”.

“Cell C is apparently arguing for an increase in the price that Vodacom customers pay to call other Vodacom customers. It’s hard to argue that increasing prices would be a benefit to consumers,” Boorman said.  — (c) 2014 NewsCentral Media

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