The Competition Tribunal on Friday issued its reasons for prohibiting Vodacom Group from acquiring a 30% to 40% stake in fibre company Maziv for R13.2 billion, citing significant anti-competitive effects that outweigh limited public interest benefits, according to a detailed ruling released on Friday.

The Tribunal’s decision, finalised on October 29, 2024, and explained in a 350-page document, halts Vodacom’s bid to buy into Maziv, a subsidiary of Community Investment Ventures Holdings (CIVH), which includes major fibre players Dark Fibre Africa (DFA) and Vumatel.

The Tribunal said, "The proposed transaction’s anti-competitive effects will be permanent. The merger-specific public interest benefits… are limited in duration and do not outweigh its negative competition effects that relate to various relevant markets.”

The ruling found that that the deal would harm competition in mobile and fibre services, affecting “millions of South African consumers that will increasingly in the future be making use of data/internet services.” The Tribunal added, “Our decision bears heavily on us since it has implications for the millions of South African consumers that now and increasingly in the future require access to affordable data and internet services.”

Vodacom, the country’s largest Mobile Network Operator (MNO), aimed to bolster its fibre infrastructure through the deal, while Maziv controls DFA, an open-access fibre-infrastructure and -connectivity provider, and Vumatel, the top fibre-to-the-home fibre network operator (FNO).

The Tribunal identified both horizontal and vertical competition issues, including the potential for Vodacom to foreclose rival MNOs and FNOs by leveraging Maziv’s dominant position in fibre markets.

The Competition Commission recommended blocking the transaction after third parties, including the Internet Service Providers’ Association (ISPA), raised fears of market consolidation and foreclosure. The Tribunal found that public interest commitments from Vodacom and Maziv, such as fibre rollouts to low-income areas, were largely not merger-specific, stating: “A very large part of the benefits that the merger parties claim… are, based on the factual evidence, in fact not merger-specific.”

The Tribunal also rejected proposed remedies, arguing that behavioural conditions were “highly technical and cumbersome” and ineffective, while a divestiture proposal failed to address the permanent loss of future competition. It noted South Africa’s history of high mobile data costs, which have eased recently due to regulatory intervention, underscoring the deal’s potential to reverse such progress.

The Tribunal said Vodacom and Maziv now have the chance to claim confidentiality over sensitive data in the ruling before a public version is released on the Tribunal’s website. The decision follows a 26-day hearing ending in September 2024, with a record spanning over 21944 pages, reflecting the case’s complexity.