Dark clouds gather over Competition Commission

Competition Commissioner Doris Tshepe has been accused of “pushing through” a ruling recommending that Vodacom’s bid to buy a R13-billion stake in Maziv be blocked, Business Times reports.

Sources at the competition watchdog have told the publication that the decision — announced in August 2023 — was a split one, with two commissioners out of the four convinced that the deal should be permitted.

Tshepe and deputy commissioner James Hodge were opposed to the deal, while the other two commissioners believed it would benefit the South African economy.

One senior commission executive, who preferred to remain anonymous, regarded the ruling as “irrational.”

They argued that public policy — and by extension competition policy — should prioritise comprehensive economic and social progress in South Africa.

“Our legislation is forward-thinking, explicitly incorporating considerations of industrial growth, job creation, and transformation into the assessments made by competition authorities regarding specific transactions,” the executive said. 

“This is clearly articulated in the preamble of the Competition Act. It is what makes the Vodacom decision irrational.”

Business Times has also received a letter from disgruntled Commission employees to former trade minister Ebrahim Patel, which contains serious allegations about Tshepe’s conduct and management style.

Staff have accused the commissioner of negligence and underperformance, alleging that new cases were not being initiated and old cases remained stuck at the investigation level.

Pertaining to the Vodacom-Maziv acquisition in particular, it took the commission unusually long — 20 months — to make its recommendation after the companies submitted the proposed transaction.

The firms had also worked with the commission to fine-tune conditions to ensure the deal achieves its purpose of improving broadband connectivity in the country while mitigating competition concerns.

These conditions were sufficient for Vodacom and Maziv owner Community Investment Venture Holdings (CIVH) to secure the support of MTN, Rain, and the Department of Trade, Industry, and Competition.

The employees also accused Tshepe of not spending enough time understanding cases fully.

“She loses the moral high ground with her lavish ways, with international trips, internal staff meetings with catering, conference dinners and year-end functions,” the letter stated.

“The events are becoming more elaborate, with alcohol purchased at (the commission’s) expense and venues booked for wedding-like events, all in complete disregard of the Public Finance Management Act and National Treasury instructions.”

MyBroadband asked Tshepe and Hodge for comment on the accusations but they did not immediately respond to our queries.

Strong resistance from government

The commission’s recommendation was among the factors weighed by the Competition Tribunal in its weeks-long hearings on the deal, which culminated in its decision to block the transaction on 29 October 2024.

Earlier this week, Vodacom and CIVH notified their shareholders they had filed a notice to appeal the prohibition.

They added they would supplement their appeal once they had received the Tribunal’s reasons for the decision.

The watchdog had 20 business days from its ruling to provide reasons for the decision. However, 23 business days have passed since the ruling and no reasons have been published as yet.

A spokesperson for the Tribunal told MyBroadband it was impractical to issue reasons within the 20-day period for cases as complex as the Vodacom/Maziv merger.

The Tribunal said the case raised complex competition issues with multiple theories of horizontal and vertical competitive harm.

It also featured complex public interest issues, including effects on the particular sector and counterfactuals to consider.

“The hearing took place over 26 days, and 19 factual and expert witnesses gave oral evidence. The record comprises at least 21,944 pages,” it stated.

“The panel members are currently drafting the reasons and are also dealing with multiple other cases other than the Vodacom/Maziv merger.”

CIVH’s largest shareholder Remgro previously said the Tribunal’s ruling came as a “complete shocker.”

Remgro’s head of strategic investments Pieter Uys said the order sent the wrong message to global investors.

“The president stands up every year and says he’s calling the industry to commit to infrastructure investment,” Uys said.

“This is a perfect example of infrastructure investment, and the public interest benefits we’ve committed to make it a no-brainer.”

Trade minister Parks Tau is also appealing the decision. It is rare for the department to oppose decisions of the commission, which is one of the entities it oversees.

Remgro chairman Johann Rupert has praised the minister’s intervention.

“I’m glad to see that he saw the absurdity of the competition board ruling,” Rupert said at Remgro’s annual general meeting this past Thursday.

“It’s a capital-intensive business that we really started with years ago to connect South Africans to the world.”