Altech goes from hero to zero

Johannesburg, 09 Jan 2009

Not long after becoming the industry darling for its unwavering stand against the Department of Communications (DOC), Allied Technologies (Altech) has fallen from grace with its last minute withdrawal from the MTN-Verizon merger hearing.

At the end of last year, Altech was hailed for its heroics against the DOC and communications minister Ivy Matsepe-Casaburri, ultimately winning a court case and subsequent appeals that led to a landmark ruling allowing VANS to be issued telecommunications licences.

However, the tide has turned against the company, as it announced this week that it would not object to the MTN-Verizon merger, before the Competition Tribunal. This comes after Altech initially fought tooth-and-nail to be allowed to present its objections at the merger hearing.

The company launched its original application in November, before changing its reasons for objecting in December and, finally, withdrawing its objections altogether on Wednesday this week - a day before the tribunal hearing was set to start.

In a media statement, outlining the reasons for its change of heart, Altech stated: “MTN has given a number of general undertakings in respect of the way in which it proposes to conduct the Verizon business.”

The statement added: “These undertakings have given Altech satisfactory comfort to address its competition law concerns.”

However, few of the parties involved in the process welcomed the decision, as five days had been set aside for Altech to present its case before the country's highest competition authority. While the withdrawal meant the merger was approved within a matter of hours by the tribunal, sources have lashed out at Altech for wasting time and money of the merging parties and their legal teams.

Future intervention

Sources close to the process say the Competition Tribunal appears not to be pleased with the manner in which the intervention process was handled. Furthermore, it appears likely that this will have an impact on the manner in which the tribunal assesses intervention applications in the future.

The tribunal would not comment this morning, apart from saying it would soon make a ruling regarding the costs of Altech's intervention application. These costs were earlier reserved by the tribunal, but it now seems likely Altech would be held liable for them.

Regarding the costs of the merger hearing itself, a tribunal spokesperson says there is, so far, no indication that MTN would pursue a reimbursement from Altech.

John Oxenham, partner at Webber Wentzel's Competition Practice, and legal counsel for Verizon in the merger, says all parties are pleased the deal has finally gone through.

However, he says the legal team had to work through the Christmas season to prepare arguments to counter the various objections that Altech brought to the fore late last year.

Oxenham states the process was trying, as Altech had changed its arguments several times. "Their decision to drop the case at the last minute is even more frustrating, because the case could well have been concluded last year."

Meanwhile, Altech would not be drawn on the negative reaction. The company's legal manager, Tyrone Reis, said this morning that the company would not comment further than what it already said in its media statement, announcing its withdrawal.

“Should the tribunal decide that we need to cover any costs related to the merger, then we will look into the matter. However, we are not saying anything more at this stage.”

Altech CEO Craig Venter is currently on leave and could not be reached for comment.