Recently, the Competition Tribunal (Tribunal) issued a ruling prohibiting the proposed transaction involving Vodacom (Pty) Ltd (“Vodacom”) and Business Venture Investments No 2213 (Pty) Ltd (“Maziv”). The proposed merger would have seen Vodacom, the country’s largest mobile operator, merge with Maziv, a significant player in fibre infrastructure. The ruling raises the question of how fine a line exists between competition and public interest in mergers.

Maziv and Vodacom had significant pre-merger plans to expand coverage, particularly in underserved low-income areas. The proposed merger would have seen Vodacom acquire 30% interest in Mazviv. However, on 08 August 2023, the Competition Commission recommended to the Tribunal that the proposed merger between Vodacom and Maziv be prohibited as the Competition Commission found that the proposed merger would substantially lower competition, particularly in the 5G Fixed Wireless Access and the fibre market. The Competition Commission found that the proposed merger would also deprive low-income consumers of the benefits of fixed competition on mobile products, such as lower prices.

Following extensive hearings during 2024, along with additional written submissions being made in October 2024, the Tribunal handed down its decision on 29 October 2024. The Tribunal’s decision aligns with the issues flagged by the Competition Commission, and the Tribunal agreed with their initial findings that such a merger would likely prevent or lessen competition in critical markets, particularly in 5G Fixed Wireless Access and fibre infrastructure. While the Tribunal has not yet provided detailed reasons for the regulatory body’s decision, its explanation and reasons are expected in due course.

In South Africa, merger law addresses competition issues and mandates a public interest inquiry. When the Competition Commission identifies a potential substantial prevention or lessening of competition (SPLC) in a merger, it must assess whether any technological, efficiency, or other pro-competitive benefits could counterbalance these negative impacts (section 12A(1)(a) of the Competition Act, 89 of 1998 (“Act”)).

The Competition Commission must determine if the merger can be justified on substantial public interest grounds as outlined in section 12A(1)(b) of the Act, which reads as follows:

“Whenever required to consider a merger, the Competition Commission or Competition Tribunal must initially determine whether or not the merger is likely to substantially prevent or lessen competition, by assessing the factors set out in subsection (2), and if it appears that the merger is likely to substantially prevent or lessen competition, then determine – whether the merger can or cannot be justified on substantial public interest grounds by assessing the factors set out in subsection (3)”

Section 12A(3) of the Act determines that when determining whether a merger can or cannot be justified on public interest grounds, the Competition Commission or the Competition Tribunal must consider the effect that the merger will have on-

(a) a particular industrial sector or region. 
(b) employment. 
(c) the ability of small and medium businesses, or firms controlled or owned by historically disadvantaged persons, to effectively enter into, participate in or expand within the market. 
(d) the ability of national industries to compete in international markets; and 
(e) the promotion of a greater spread of ownership, in particular, to increase the levels of ownership by historically disadvantaged people and workers in firms in the market.

The Act explicitly requires authorities to consider not only competition factors but also public interest factors. This approach ensures that any proposed merger aligns with broader socio-economic issues, including employment, ownership diversity, community welfare, and market competitiveness. The Competition Commission and Tribunal conduct the above determination on a case-by-case basis and a balance of probabilities.

The proposed Vodacom merger sheds light on the challenge regulatory bodies face in balancing the prevention of anti-competitive behaviour while bolstering the economy through new jobs and better infrastructure. Although Vodacom plans were to invest over R10 billion to expand internet access to poor areas, an investment that could create approximately 10,000 jobs and give schools and police stations free internet, regulatory bodies must balance these advantages against the risk that fewer companies might hurt competition in the long run.

As Vodacom prepares to potentially appeal the Tribunal's decision, many will be watching to see how things unfold. The appeal will examine how well officials have balanced two key concerns: creating jobs and expanding digital access versus keeping the market competitive. The outcome may very well establish precedents and shape the standards for future mergers in South Africa's telecommunications sector and beyond.


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