Get more Mail & Guardian
Subscribe or Login

Vodacom stock down as Competition Commission launches investigation.

The Competition Commission said on Wednesday it has started an investigation into cellphone giant Vodacom for “abuse of dominance”.

This comes after Vodacom [VOD] secured an “exclusive exclusive four-year agreement” with National Treasury to be the sole provider of mobile telecommunication services to the government.

After news of the investigation broke, the cell phone giant’s share price dived 5% on the JSE.

The commission said in a statement that the contract would entrench Vodacom’s dominant position in the market, raise barriers to entry and expansion, distort competition in the market; and result in a loss of market share for other network operators.

Vodacom and National Treasury did not immediately reply to a request for comment.

The commission said that, before Vodacom entered into the agreement, all government departments could purchase mobile telecommunication services from “any mobile network operator”.

“In March 2016, Treasury issued a tender for the supply and delivery of mobile communication services to national and provincial government departments for the period 15 September 2016 to 31 August 2020,” it said.

“Vodacom was the preferred supplier after the other bidders were eliminated at different phases of the bidding process.”

Exclusion

“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,” it said.

The act prohibits a dominant firm from abusing its dominance by requiring or inducing a supplier or customer to not deal with a competitor.

It also stops firms from engaging in “exclusionary acts” that impedes the entry of other firms into the market.

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.

Related stories

Advertising

Subscribers only

‘People feel they have a stake in SAA’ — Gidon...

Interest in the beleaguered national carrier, which has received billions of rands in public funding, means criticism is inevitable

Soweto teacher dismissed for the alleged repeated rape of a...

The learner was 13 when the alleged rapes started, and they continued for two years until she asked to be moved to another school

More top stories

Hospitals near capacity: What the new Covid-19 restrictions mean for...

After a dramatic surge in Covid-19 infections, President Ramaphosa has brought the country back to level three restrictions

Eskom to take over distribution, billing at troubled Free State...

The Maluti-a-Phofung local municipality owes the power utility more than R5-billion

ANC committed to paying staff salaries, but employees are not...

ANC staffers picketed outside Luthuli House on Tuesday after months of problems with salary payments

Kanalelo Boloetsi: Taking on Lesotho’s cellphone giants, and winning

A man who took on cellphone data regulators over out-of-bundle rates is featured in this edition of a series on human rights defenders in the SADC region
Advertising

press releases

Loading latest Press Releases…
×