BEE group wants Blue Label investigated for monopoly

Read time 3min 10sec

Sello Phakoe, chairman of black economic empowerment consortium Eliovect, which lodged a complaint at the Competition Commission for alleged unfairness meted on small and medium enterprises in the prepaid airtime market, is hopeful the anti-trust watchdog will open the space to black service providers.

The claim against Blue Label Telecoms and others alleges these entities are a monopoly controlling prepaid airtime market distribution as a coalition of mobile operators and retailers.

The complaint claims Blue Label’s purchase of Cell C ensures vertical and horizontal integration across the value chain and unfair market dominance, supported by exclusive contracts, massive infrastructure commitments by mobile carriers as well as discounts, which have previously been unavailable to black service providers.

“We would like to achieve a level playing field for SMMEs and in particular black-owned SMMEs,” says Phakoe.

The Competition Commission has confirmed it is investigating the matter.

Commission spokesperson Sipho Ngwema says: “The investigation continues and we can’t make a determination at this point on when we shall conclude.

“The complaint is against the following major retail groups: Shoprite, Pick n Pay, Woolworths, Spar, OK Franchises, Massmart Group and Steinhoff International, as direct or parent companies of major retail chains through which various products, including prepaid airtime and starter kits, are sold.”

Meanwhile, Phakoe says his consortium hopes for a favourable outcome from the government anti-trust watchdog.

“This is where we are hoping our government institutions can assist us. Institutions like the Competition Commission and ICASA are critical in turning this tide as SMMEs do not have the financial muscle to face the legal and financial prowess of these monopolies if and when they choose to collude.”

He adds there is only one black-owned competitor in the space in which Blue Label operates and “they don't receive the same discounts”.

“This is difficult as all black companies ‘can buy’ direct but this is misleading. The issue is not about direct access but the financial terms they will receive. They will never receive the same discounts or ‘thank you’ cheques that the monopolies will. This means they will never be able to compete.”

Nicola White, Blue Label spokesperson, hit back at Phakoe and the Competition Commission.

“The complaint received by the Competition Commission is riddled with inaccuracies and, in our view, has no merit whatsoever,” she says.

“Blue Label, since its inception in 2000, has been driving financial inclusion for the mass market. We believe all South Africans should be able to access First World financial products closer to their homes, decreasing the cost of transport and making their lives more convenient. We continue to drive our growth into the informal market.“

Further, she questions the rational motivation of the investigation.

“How we do this is to manage all the logistics, technology, R&D, capex, financial reconciliation and marketing functions for our spaza shop owners and informal retailers, whilst taking all the risk in doing so. We provide airtime and data, bill payments services, electricity, gaming and ticketing products and services, as well as training and marketing support.”

White says the discounts Blue Label receives from the mobile network operators (MNOs) are no different to those received by all the other distributors of MNO products.

She also denies Blue Label is Cell C’s exclusive prepaid airtime distributor.

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