South Africa: MTN, Vodacom in the clear on collusion charges


The Competition Commission has finally ruled in a case of alleged price fixing by MTN and Vodacom, finding in favour of the two operators. The matter had been under investigation since 2004. The commission has decided not to refer the case to the Competition Tribunal because it could not find evidence that MTN and Vodacom colluded to fix their tariffs.

The first complaint of collusion brought to the commission was lodged in 2004. Two others were submitted in 2005, one relating specifically to wholesale mobile termination rates, the fees operators charge each other to carry calls between their networks.

Independent Democrats leader Patricia de Lille also threw her hat into the ring last year when she spearheaded a political drive to force operators to lower termination rates, adding her name to the list of complaints at the commission.

The investigations into the complaints have faced several hurdles since the time they were lodged, including a jurisdictional issue the commission faced with the Independent Communications Authority of SA (Icasa) over which regulatory body had the right to investigate competition matters in the telecommunications market.

Those issues were put to bed in November 2009, when the Supreme Court of Appeal handed down a landmark ruling finally giving the commission jurisdiction to investigate telecoms matters. The commission also signed a memorandum of understanding with Icasa setting out which organisation would investigate which issues.

Oupa Bodibe, manager for stakeholder relations at the Competition Commission, says the parties that lodged the claims against MTN and Vodacom have been notified that the case has been concluded and have been given the reasons the commission decided not to refer the matter to the tribunal.

Between 2004 and 2009, there were no regulations governing the prices operators could charge each other for terminating calls on their networks. Both MTN and Vodacom have faced criticism for increasing termination rates at the time Cell C entered the market. The two operators have vehemently denied accusations that they raised the rates to undermine Cell C’s chances of success.

In 2009, the operators, under political pressure, agreed to reduce termination rates from R1.25/minute in peak times to 89c/minute. The off-peak rate stayed at 77c/minute, with the changes taking effect on 1 March 2010.

Icasa then introduced regulations which will result in the rates coming down to 40c/minute for both peak and off-peak calls by 2013. The first of these cuts happened at the beginning of this month but few operators have passed on the benefits in the form of retail price cuts.

Though the commission says it still has some concerns about the rates between 2004 and 2009, Bodibe says most of the matters raised in the complaints have been dealt with by the new regulations and the voluntary rate cut that came into force last year.