Published: 04 October 2017

The 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.

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