The Competition Commission has started an investigation into Vodacom Group after the company secured an exclusive contract with National Treasury to be the sole provider of mobile telecommunication services to the government.
It said the investigation is over the “abuse of Vodacom’s dominance in the South African market”.
“Before Vodacom entered into the exclusive four-year agreement with National Treasury, all government departments could purchase mobile telecommunication services from any mobile network operator,” said the Commission.
There are 20 government departments which will be subjected to the new Vodacom contract. Other departments, including state-owned entities and municipalities, will be incentivised to adopt the new contract.
“The Commission has reasonable grounds to suspect that the exclusive contract may constitute an exclusionary abuse of dominance by Vodacom in contravention of the Competition Act.”
“The Act prohibits a dominant firm from abusing its dominance by requiring or inducing a supplier or customer to not deal with a competitor.”
The Commission said the Treasury’s contract will:
- Further entrench Vodacom’s dominant position in the market.
- Raise barriers to entry and expansion in the market.
- Distort competition in the market.
- Result in a loss of market share for other network operators.