Competition Commission decides not to prosecute Vodacom and MTN, following Cell C’s complaint
Provided by Competition Commission South Africa
Topics Competition & Antitrust Law
20 Apr 2017
The Competition Commission has decided to non-refer (not to prosecute) a complaint lodged by Cell C in October 2013 against Vodacom and MTN for anti-competitive conduct due to insufficient evidence required to successfully prosecute. This decision follows a lengthy investigation which revealed that there were several features in the mobile telephony market which affect the ability of smaller mobile operators to compete in the market.
Cell C had alleged Vodacom and MTN engaged in pricing strategies that made it cheaper to make on-net calls (calls between users of the same network) as compared to off-net calls (calls between people on different networks). In particular, Cell C complained that the price differentials applied by Vodacom and MTN prevented competition and further accused the two companies of excessive pricing, inducement and margin squeeze.
The Commission found that it would be unlikley to succeed in a prosecution of the specific conduct subject to Cell C’s complaint. However, there is evidence to suggest that this conduct and other features of the market, in particular the price differentials applied for on-net and off-net calls as well as long-term subscribers’ contracts have made it difficult for late entrants such as Cell C to compete effectively.
There is therefore a need to look broadly into the state of competition in the mobile telephony market in South Africa, specifically at the retail level, as the market is still dominated by two mobile market players, years after the licensing of Cell C and Telkom Mobile. In this regard, the Commission will engage the Independent Communications Authority of South Africa (ICASA) to explore regulatory interventions that may be necessary to make the market competitive(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)