Competition Commission Investigates Vodacom’s Contract To Provide Mobile Services To All Government Departments

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The Competition Commission has initiated an investigation against Vodacom Group (Pty) Ltd (Vodacom) for abuse of dominance after the company secured an exclusive contract with National Treasury to be the sole provider of mobile telecommunication services to the government.

Before Vodacom entered into the exclusive four-year agreement with National Treasury, all government departments could purchase mobile telecommunication services from any mobile network operator.
The Commission has information that there are 20 government departments which will be subjected to the new Vodacom contract. Other departments, including state owned entities and municipalities, will be incentivised to adopt the new contract.

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.
The Act prohibits a dominant firm from abusing its dominance by (1) requiring or inducing a supplier or customer to not deal with a competitor and (2) engaging in an exclusionary act that impedes or prevents a firm’s entry or expansion within a market, unless the firm concerned can show technological, efficiency or other pro-competitive gains which outweigh the anti-competitive effect of its act.
The Commission is of the view that the contract will:
• Further entrench Vodacom’s dominant position in the relevant market;
• Raise barriers to entry and expansion in the relevant market;
• Distort competition in the market; and
• Result in a loss of market share for other network operators.

Background
In March 2016, National 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. Vodacom was the preferred supplier after the other bidders were eliminated at different phases of the bidding process.

Media Statement Issued by The Competition Commission of South Africa

5 Comments on "Competition Commission Investigates Vodacom’s Contract To Provide Mobile Services To All Government Departments"

  1. You know Sis Pinky, unless the Competition Commission’s Act is changed to give it more teeth to impose real and not artificial sanctions, we will start to take them serious.

    Currently companies budget for their 10% potential penalty and they do so by raising prices on us consumers.

    If at all they end up being penalized, they come back to us consumers to recover their lost money. So you can actually say it’s a window dressing exercise done in the name of consumers while in fact Competition commissions actions harms consumers more than they harm the perpetrators.

    In fact their actions comes across designed more to make them relevant,thereby protecting their disbandment than actions meant to protect the consumer.

    To start with, how much of the money’s they collect in the name of the consumer actually finds it’s way to the consumer?

    Nothing at all.

    So, for me it’s either Competition commission gets disbanded like Scorpions and replaced with a new Industry watchdog or their Powers gets revisited to give them more teeth to jail CEO’s.

  2. Dithupa Mailula | October 5, 2017 at 10:51 am | Reply

    Whilst I am fully anti-monopoly / passionately anti-cartels, I think the problem is not only with Vodacom in this instance. National Treasury must take the blame as well. Why would the State Treasury enter into an agreement like this one, in the first place? If we are to succeed in unbundling the apartheid economy which benefit only a few and certain families, why do we have deals like this one, initiated by our govt. It does not make sense at all, whichever you look at it. This goes to show that the centre is not holding. How transformative is this contract? Who going to benefit here? Obviously, Vodacom and perhaps, a few individuals as well, but definitely not the people. May we remind the powers that be, that we want a people centred economy. Unbundle these monopolies that embedded in the SA economy. Open up the space in the economy and create opportunities for more people than creating opportunities for a few. Remove the cosmestic and nuisansical barriers / threshold and let the people take up the opportunities out there. That way, the economy will grow but more importantly, the people shall benefit as well. We need to move away from the status quo, get the fundamentals right and open up the economic space for everyone. That way, there will be sufficient incentives for investors and local people to partake in the economy, rather than just benefitting a family or families or group of certain individuals.

    • Pinky Khoabane | October 5, 2017 at 3:24 pm | Reply

      This is Pravin Gordan era. ANd I agree that the fault should not be only on Vodacom.

    • Ntate Dithupa, this is just one classic example of what Pravin Gordhan has been up to at our National Purse.

      Dishing out money to his friends and family under the protection of OPERATION MOCKINGBIRD.

      Malusi GIGABA when in Parliament mentioned something in the line of DELOITTE AND TOUCHE HAVING A 120 YEARS CONTRACT WITH THE TREASURY WHICH NEEDS TO BE INVESTIGATED.

      ICT Company Oracle, getting a Tender of R400 Millions for work commencing in 2022.

  3. Just wonder who owns the other shares not owned by Vodafone PLC??

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