Telkom SA Soc Limited v Business Connexion Group Limited (Dimension Data (Proprietary) Limited Intervening) (LM065Aug14) [2015] ZACT 112; [2015] 2 CPLR 688 (CT) (12 October 2015)

Telkom SA Soc Limited v Business Connexion Group Limited (Dimension Data (Proprietary) Limited Intervening) (LM065Aug14) [2015] ZACT 112; [2015] 2 CPLR 688 (CT) (12 October 2015)

The Tribunal found that the revised merger conditions, negotiated and agreed by all parties including the Commission and Dimension Data, adequately addressed the competition concerns of input foreclosure, bundling, and cross-subsidisation. The conditions extended the transfer pricing programme to include fibre and copper products, imposed a price freeze on affected products, required non-discriminatory service level agreements, and mandated external profitability reporting for transparency. Public interest concerns regarding employment were addressed by limiting merger-specific retrenchments to a maximum of 60 employees over three years. On this basis, the Tribunal concluded that the...

Citation
[2015] ZACT 112
Parties
Applicant: Telkom SA SOC Limited; Respondent: Business Connexion Group Limited; Intervening Party: Dimension Data (Proprietary) Limited; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
12 October 2015
Case Number
LM065Aug14
Procedural Posture
Large Merger Review / Conditional Approval After Hearing
Outcome
Merger conditionally approved subject to the agreed conditions.
Judges
Yasmin Carrim, Mondo Mazwai, lmraan Valodia
Legal Topics
Merger Control, Input Foreclosure, Bundling, Transfer Pricing, Public Interest Employment
Competition Law Commercial and Corporate Merger Control Input Foreclosure Bundling Transfer Pricing Public Interest Employment

Case Brief

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Parties

Telkom SA SOC Limited

Applicant

Business Connexion Group Limited

Respondent

Dimension Data (Proprietary) Limited

Intervening Party

Competition Commission

Respondent

Procedural Posture

Large Merger Review / Conditional Approval After Hearing

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the relevant ICT markets.
  2. 2 Whether the merger would enable Telkom to engage in input foreclosure or anticompetitive bundling strategies.
  3. 3 Whether the proposed conditions adequately address competition and public interest concerns, including employment impacts.

Ratio Decidendi

The Tribunal found that the revised merger conditions, negotiated and agreed by all parties including the Commission and Dimension Data, adequately addressed the competition concerns of input foreclosure, bundling, and cross-subsidisation. The conditions extended the transfer pricing programme to include fibre and copper products, imposed a price freeze on affected products, required non-discriminatory service level agreements, and mandated external profitability reporting for transparency. Public interest concerns regarding employment were addressed by limiting merger-specific retrenchments to a maximum of 60 employees over three years. On this basis, the Tribunal concluded that the...

Court Disposition

Merger conditionally approved subject to the agreed conditions.

Orders

  • The merger between Telkom SA SOC Limited and Business Connexion Group Limited is approved subject to the conditions set out in Annexure A.
  • The number of merger-specific retrenchments is limited to a maximum of 60 employees over three years, with no more than 20 per year.