MICHAEL AVERY: Competition Tribunal’s anti-concentration orthodoxy for mergers is counterproductive

In a ruling that reads more like an act of ideological zeal than a product of rational competition policy, the Competition Tribunal’s decision to block the proposed merger between Vodacom and Maziv — the latter a leading fibre infrastructure entity under Community Investment Ventures Holdings (CIVH) — has sent shock waves through the SA telecom industry.

The tribunal’s reasons are forthcoming, but anyone with a finger on the pulse of the competition regulator’s mindset will know what to expect: a predictable refrain about “concentration”, “ownership” and “participation”, the ideological triad that has increasingly hijacked SA’s competition process.

The deal was meant to marry Vodacom’s unparalleled reach and resources with Maziv’s fibre ambitions, opening significant investment into underserved, lower-income areas. The merger offered Vodacom a 30% stake in Maziv for a handsome R6bn, along with certain fibre assets valued at R4.2bn, setting the stage for the kind of capital infusion SA’s digital infrastructure desperately needs. Yet the tribunal saw it differently, leaning — as has become routine — on a stubborn anti-concentration orthodoxy that places SA in a league of its own globally.

Ideally, competition policy is about ensuring consumer welfare through efficiencies, innovation and market access — not about re-engineering the private sector to fit some amorphous notion of “equal participation”. The commission appears committed to reducing concentration at any cost.

This policy bias was enshrined in the “Concentration Tracker,” a report fixated on the “inefficiency” of large firms while downplaying the indispensable role these companies play in SA’s economy, from job creation to world-class innovation. In essence, the Tracker presupposes that any growth or consolidation in a large SA company is inherently harmful — Vodacom’s proven efficiencies, investments and consumer benefits be damned.

The commission’s approach now sees mergers in “concentrated” sectors as inherently problematic, regardless of the efficiency gains or public benefits they may generate. This ideological rigidity is not only misguided, it’s economically counterproductive. SA businesses, particularly in tech and telecoms, must contend with a host of regulatory hurdles, infrastructure bottlenecks and the weight of systemic inefficiencies in energy and transport.

For the commission to pile onto these woes by shackling companies such as Vodacom is a testament to its disregard for the very real contributions large firms make to economic growth and innovation. The blind insistence on curtailing “big players” becomes even more preposterous in the telecom sector — telecoms is a capital-intensive, high-stakes game, demanding relentless investment in technology and spectrum, as well as a secure energy supply to keep operations stable in a power-stricken country.

If any sector can benefit from economies of scale it’s telecoms, where size and infrastructure investments lead to the kind of efficiencies that benefit consumers directly. This is basic economics: more users, better investments and ultimately better services. But in its ideological fervour the commission prefers to obstruct these benefits rather than recognise global economic realities.

Maziv had committed R10bn in capital expenditure over the next five years, promising to extend fibre to 1-million homes in lower-income areas. The merger could have created 10,000 jobs and launched a R300m enterprise and supplier development fund. These are the kind of commitments that could directly uplift SA communities and spark a digital revolution. But evidently the tribunal has other priorities, such as sacrificing growth on the altar of anti-concentration.

The irony here is that even the most “concentrated” sectors in SA, such as banking, are highly competitive and innovative, yet the commission still clings to the notion that size alone is a marker of inefficiency. This prejudice is not only unfounded, it betrays an economic naiveté. For example, telecoms is a regulated industry where the Independent Communications Authority of SA (Icasa), not the Competition Commission, should be setting the rules on access and competition.

If Icasa deems it necessary, it can impose rollout obligations on Vodacom for underserved communities. Blocking the Vodacom-Maziv merger does nothing to address these needs; it simply blocks an investment that could have empowered Maziv to do just that.

Equally troubling is the commission’s habit of meddling beyond mergers. Its recent market inquiries show that it views large firms as fair game for heavy-handed “remedies”, demanding actions such as having franchisees hire local couriers rather than relying on platforms with scale such as Uber Eats. This goes beyond competition policy and veers into social engineering.

The commission’s vendetta against size has blinded it to the actual economic forces that drive growth and innovation. And it’s laughable that while the commission plays micromanager with local firms, global behemoths such as Shein and Temu are making inroads into SA with unchecked might.

The message to foreign investors is crystal clear — your money and ambitions are better spent elsewhere. Why wade into SA’s quicksand of regulatory micromanagement when you could invest in countries where scale, efficiency and consumer benefits are appreciated rather than derided?

The Vodacom-Maziv decision sends a chilling message that SA’s economy is an ideological Petri dish, where regulators have more interest in social experiments than fostering real growth. If this keeps up it won’t just be foreign investors fleeing. SA’s own champions of industry may start looking north for opportunities their home country’s regulatory bodies refuse to afford them.

In place of a competition watchdog that objectively assesses the effects of market consolidation we now have an ideological gatekeeper more focused on reducing inequality through corporate cannibalisation. The consequences are dire: fewer investments, fewer jobs, fewer advancements in infrastructure, and the stifling of a competitive edge in the global marketplace.

If the commission is unwilling to recognise the benefits of scale, let’s hope the Competition Appeal Court will restore economic sanity to this debate.

• Avery, a financial journalist and broadcaster, produces BDTV's Business Watch. Contact him at Badger@businesslive.co.za.