‘Trying to comply with the Competition Commission is a fool’s errand’: FMF response to Vodacom merger
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‘The Commission continues its war on free enterprise.’ – Zakhele Mthembu, Legal Researcher, Free Market Foundation
The Competition Commission has recommended that the proposed merger between Vodacom and Maziv be prohibited. The Free Market Foundation (FMF) is alarmed that the Commission is continuing its interference in the market to the detriment of economic dynamism and competitiveness. The viability of growing enterprises is threatened by this reckless behaviour by a regulator that misunderstands the process of market competition.
‘The Commission continues its war on free enterprise – it is more concerned with cutting down the tallest trees, than encouraging the growth of smaller trees,’ says FMF Legal Researcher, Zakhele Mthembu, in response to the rejection of the acquisition.
The Commission’s opposition to Vodacom’s acquisition of fibre infrastructure provider Maziv is premised on a misunderstanding of the market competition process. The Commission has long sought to submit that the acquisition of one company by another in the same or similar market necessarily results in less competition.
The FMF understands that despite both enterprises going beyond what one could expect any business to do, with various non-economic concessions on empowerment, including a moratorium on retrenchments, the establishment of a supplier development fund, an employee benefit scheme, new employment opportunities, and maintaining the use of suppliers controlled by previously disadvantaged persons, the Commission still saw fit to deny the merger.
‘Trying to comply with the Competition Commission is a fool’s errand,’ says Mthembu.
‘The market will remain entirely contestable after the merger. Opposing it on grounds that competition will be harmed, is misguided,’ added Mthembu.
The Competition Commission has a restrictive interpretation of its own merger requirements. Its main concern is that after the acquisition of Maziv, Vodacom will ‘self-preference’ by inhibiting rival internet service providers (ISPs) that presently use the Vumatel (a Maziv subsidiary) network.
Rather than prohibiting the merger based on this flawed presumption, the Commission could instead have recommended a condition on the merger that the merged entity may not exclude or inhibit other ISPs from continuing to use the network.
The FMF regards the exercise of private property rights as a fundamental freedom that should not be inhibited simply because a company would (understandably) engage in self-preferencing. The ability of ISPs to switch to another fibre infrastructure provider, like Openserve, or to invest in building new infrastructure, like Vumatel did, will remain even after the merger.
A merger condition would, similarly, be a limitation of the free exercise of property rights, but this would have been a significantly less restrictive approach, as section 36(1) of the Constitution requires regulators to prefer, when infringing on civil and economic freedoms.
The parties involved should oppose the recommendations of the Commission when brought for confirmation at the Competition Tribunal.
The concessions made by Vodacom and Maziv should have been more than sufficient to address the concerns of the Commission. ‘The fact that they were not, shows beyond any doubt the anti-free enterprise attitude prevailing at the competition regulator’, concludes Mthembu.
Ends.
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Anneke Burns
FMF Public Relations
0714230079
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‘Om aan die Mededingingskommissie te probeer voldoen, is ‘n sinnelose poging’: FMF-reaksie op Vodacom-samesmelting
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‘Die Kommissie gaan voort met sy oorlog teen ondernemingsvryheid.’ – Zakhele Mthembu, Regsnavorser, Vryemarkstigting
Die Mededingingskommissie het aanbeveel dat die voorgestelde samesmelting tussen Vodacom en Maziv verbied moet word. Die Vryemarkstigting (FMF) is bekommerd dat die Kommissie voortgaan met sy inmenging in die mark tot nadeel van ekonomiese lewenskragtigheid en mededingendheid. Die lewensvatbaarheid van groeiende ondernemings word bedreig deur hierdie roekelose gedrag van ‘n reguleerder wat die proses van markmededinging verkeerd verstaan.
‘Die Kommissie gaan voort met sy oorlog teen ondernemingsvryheid – dit is meer gemoeid met die afkap van die hoogste bome, as om die groei van kleiner bome aan te moedig,’ sê FMF Regsnavorser, Zakhele Mthembu, in reaksie op die verwerping van die samesmelting.
Die Kommissie se teenkanting teen Vodacom se verkryging van die fibre-linfrastruktuurverskaffer Maziv is gegrond op ‘n wanbegrip van die markmededingingsproses. Die Kommissie poog lank om te beweer dat die verkryging van een maatskappy deur ‘n ander in dieselfde of soortgelyke mark noodwendig tot minder mededinging lei.
Die FMF verstaan dat alhoewel beide ondernemings verder gaan as wat ‘n mens van enige besigheid kan verwag om te doen, met verskeie nie-ekonomiese toegewings op bemagtiging, insluitend ‘n moratorium op afleggings, die stigting van ‘n verskaffersontwikkelingsfonds, ‘n werknemervoordeelskema, nuwe werksgeleenthede, en die handhawing van die gebruik van verskaffers wat deur voorheen-benadeelde persone beheer word, het die Kommissie dit steeds goed geag om die samesmelting af te keur.
‘Om aan die Mededingingskommissie te probeer voldoen, is ‘n sinnelose poging,’ sê Mthembu.
‘Die mark sal na die samesmelting hééltemal aanvegbaar bly. Om dit teen te staan op grond daarvan dat mededinging benadeel sal word, is dwaas,’ het Mthembu bygevoeg.
Die Mededingingskommissie het ‘n beperkende interpretasie van sy eie samesmeltingsvereistes. Sy grootste bekommernis is dat Vodacom ná die verkryging van Maziv in ‘selfvoorkeuring’ sal verkeer, deur mededingende internetdiensverskaffers (ISP’s) wat tans die Vumatel (‘n Maziv-filiaal)-netwerk gebruik te inhibeer.
Eerder as om die samesmelting te verbied op grond van hierdie gebrekkige vermoede, kon die Kommissie eerder ‘n voorwaarde vir die samesmelting aanbeveel het, dat die saamgesmelte entiteit nie ander ISP’s mag uitsluit of verhinder om steeds die netwerk te gebruik nie.
Die FMF beskou die uitoefening van private eiendomsreg as ‘n fundamentele vryheid wat nie belemmer moet word bloot omdat ‘n maatskappy (heel verstaanbaar) selfvoorkeuring sal beoefen nie. Die vermoë van ISP’s om oor te skakel na ‘n ander fibre-infrastruktuurverskaffer, soos Openserve, of om te belê in die bou van nuwe infrastruktuur, soos Vumatel gedoen het, sal selfs ná die samesmelting tot hul beskikking bly.
‘n Samesmeltingsvoorwaarde sou insgelyks ‘n beperking op die vrye uitoefening van eiendomsreg wees, maar dit sou ‘n aansienlik minder beperkende benadering gewees het. Artikel 36(1) van die Grondwet vereis dat reguleerders die minste-beperkende maatreël moet verkies wanneer hulle burgerlike en ekonomiese vryhede aantas.
Die betrokke partye moet die aanbevelings van die Kommissie teenstaan wanneer dit by die Mededingingstribunaal vir bevestiging gebring word.
Die toegewings wat Vodacom en Maziv gemaak het, moes meer as voldoende gewees het om die bekommernisse van die Kommissie aan te spreek. ‘Die feit dat dit nié was nie, toon bo enige twyfel die anti-ondernemingsvryheid-houding wat by die mededingingsreguleerder heers,’ sluit Mthembu af.
Einde.
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Anneke Burns
FMF Openbare Betrekkinge
0714230079