One last hurdle for Vodacom + Maziv  

It turns out the Competition Appeal Court (CAC) isn’t just going to rubber stamp the Competition Commission’s beefed-up agreement with Vodacom and Maziv and let one of the most significant telecommunication mergers ever seen in the country go sailing through. 

If only things were that straightforward.  

In terms of the law the CAC is faced with three options: it can set aside the Competition Tribunal’s decision to prohibit the merger; it can amend the tribunal’s decision; or it can confirm the tribunal’s decision.  

That means – still – that anything could happen from here. A thought that probably sends chills through the merging parties, which have spent the past four years inching their way through the harrowing procedures of the competition authorities. 

The good news is that CAC judge Norman Manoim has stated categorically, if somewhat tongue in cheek, that “we undertake to be shorter than anyone else in this matter”.  

Taken literally that means the CAC could take until August 2026 to announce its decision. 

Analysts reckon it will be a lot quicker. They’re talking in terms of days and weeks rather than months and years. 

Not that it won’t be a difficult decision for the CAC. It is in untested territory.  

Even before two parties to the transaction – Vodacom and Maziv – had received the reasons for the Competition Tribunal’s decision to prohibit the merger, they had lodged an appeal with the CAC.  

At that stage the commission was set to oppose the appeal though, in an unprecedented move, the commission’s boss – trade, industry and competition minister Parks Tau – issued a statement saying he was supporting the merging parties’ appeal. 

Things were set for a traditional legal battle between opposing parties. 

But then, in another unprecedented move, the commission unexpectedly announced it had reached an agreement with the merging parties and withdrew its opposition to the CAC appeal. 

This leaves the CAC having to consider a significantly altered merger arrangement without the benefit of an opposing voice. 

The lopsided nature of the situation was apparent on Tuesday during the CAC’s hearing, when everyone seemed to be having a go at the tribunal. An easy target, given the tribunal was not entitled to participate in the CAC proceedings. 

Presumably what the CAC has to do now is decide if the considerably upgraded conditions address most of the concerns behind the tribunal’s prohibition. The merging parties will be desperately hoping that increased capex commitments, enhanced coverage and connection commitments, protection for lower-income consumers, tougher divestiture obligations and reduced incentives to foreclose on competitors will be enough to push the deal over the CAC line. It’s an impressive range of commitments. 

But impressive as they are, the most intriguing aspect of the new conditions is the beefed-up role of the monitoring trustee, who now has access to an industry expert.  

Fast-tracking

One of the key challenges of conditionally approving any mega-merger is policing the conditions. Without effective monitoring, attaching conditions to merger approval is almost pointless. 

So an expert-backed, fast-tracking monitor is a remarkable innovation. 

If it works, it would be a game-changer and a precedent for subsequent mega-mergers. But making it work effectively won’t be easy. The monitor will have to figure out if a complaint represents a genuine infraction or is just an opportunistic tactic by a competitor or disaffected consumer. 

In this case, the CAC may also have to clarify the extent of the monitor/expert’s role. Will it be required to ensure the merged entity is not imposing anti-competitive harm on the market as well as ensure it is adhering to its public interest commitments? Or is its planned role more streamlined? 

All in all, another one of those unique challenges facing the competition authorities. Is it any wonder it all takes so long? 

_{Top image: Rawpixel/Currency collage.}