Two senior advocates yesterday slammed the Competition Tribunal for cherry-picking evidence and failing to properly assess public interest benefits in its 2024 decision to block the multibillion-rand Vodacom–Maziv merger.
Several parties were in the Competition Appeal Court on Tuesday seeking to overturn October’s decision barring a merger between Vodacom and Maziv that would create South Africa’s largest fibre company.
The enhanced offer recently agreed between the merging parties and the Competition Commission included, among other commitments, increased capital expenditure by Maziv, measures to promote competition between fibre-to-the-home and fixed wireless access, and assurances of competitive pricing.
These changes led the commission to withdraw its opposition to the appeal heard yesterday.
Vodacom CEO Shameel Joosub, in a statement on the operator’s trading update for the three months to June, said he was “encouraged” that the commission would “no longer oppose our acquisition of a 30% stake in Maziv,” which he said came ahead of yesterday’s appeal hearings.
Yet, the Competition Appeal Court hit back, questioning why the merging parties and the commission had revised merger terms if they were simultaneously appealing the tribunal’s original decision.
Judge president Norman Manoim and judge Dennis Davis questioned the logic of filing new conditions while concurrently asking the court to rule only on legal grounds. Manoim asked why revised terms were introduced at all, while Davis said the new conditions “compounds” and “suspends” the case, suggesting a better argument would be that the changes resolve the tribunal’s original concerns.
Vodacom and Maziv’s counsel, advocate Jerome Wilson, responded that the revised merger conditions were “purely incremental” and not central to their appeal as they had not been put before the tribunal. He argued the focus should be on the tribunal’s legal missteps in finding the R14 billion transaction anti-competitive and misapplying public interest factors.
South Africa’s largest mobile network operator has, since the announcement of the deal and its initial investment of R14 billion, agreed to ultimately own a smaller stake in response to concerns that it would have too much control, which takes its contribution down to R12.2 billion.
Wilson said the parties were not asking for a “rubber stamp” of the new conditions, while insisting the tribunal had misdirected itself in law and had not weighed all relevant considerations.
Advocate Duncan Turner, for Vodacom, accused the tribunal of selectively reading the evidence. “You can’t ignore pages that you don’t like… we submit that there is no reason to prohibit this merger,” he told the court.
For the Department of Trade, Industry and Competition, advocate Michelle le Roux criticised the tribunal’s reasoning, saying minister Parks Tau wanted the tribunal’s decision overturned. She said the tribunal had focused excessively on competition concerns and essentially skipped over the deal’s public interest benefits – which include broadband expansion in underserved areas.
Le Roux said the “improperly excluded… aspects of the public interest commitments” should have been considered independently of the competition concerns, adding that the new conditions were not necessary. “The public interest was improperly considered. The conditions were sufficient.”
Le Roux insisted the commitments would drive investment and fibre rollout to areas that would otherwise be excluded on commercial grounds, including townships, rural areas, schools, police stations and clinics.
“These commitments are… a flywheel or a catalyst,” Le Roux said. “If you are in a school or a clinic or a police station in a rural area… fibre commitment there… is really the game-changer.”
During arguments from the commission, Davis questioned its shift in stance. Although the commission initially opposed the merger, it now supports the deal under the old and new conditions taken together while it was also not opposing the appeal.
“You are certainly not in a position now to defend the tribunal,” Davis told advocate Danny Burger, for the commission.
Burger acknowledged the commission believed the new terms “significantly deal with the competition problems… and add to the public interest commitments”.
Davis pressed him on the inconsistency: “You're not opposing now the approval of the merger,” he said, and also accused the commission of trying to have it both ways in its interpretation of the law. He referenced the Walmart–Massmart case as an example of shifting interpretations of the Competition Act.
“The merger conditions morphed and changed,” Davis also noted. Burger conceded this but denied the commission had dragged out the process: “I don't want there to be an impression… that it was the commission that was dragging its feet.”
The court will make a ruling at a later date.
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