Between Possibility and Probability
Potential Competition in the Vodacom/Maziv Transaction
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November 06, 2025
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In August 2025, the Competition Appeal Court (“CAC”) overturned the Competition Tribunal’s (“Tribunal”) decision to prohibit the Vodacom (Pty) Ltd (“Vodacom”) acquisition of a 30% stake in Maziv (Pty) Ltd (“Maziv”), approving the transaction subject to a revised set of conditions. Vodacom is primarily a mobile network operator, while Maziv’s relevant subsidiaries, Vumatel (Pty) Ltd (“Vumatel”) and Dark Fibre Africa (Pty) Ltd (“DFA”), are both fibre network operators.
One of the key theories of harm concerning the Vodacom/Maziv transaction was whether it would substantially lessen future competition by removing Vodacom as a potential competitor to Maziv across the relevant markets. Specifically, it was alleged that absent the transaction, Vodacom would aggressively roll out: (i) fibre infrastructure in competition with Maziv; and (ii) Fixed Wireless Access (“FWA”) services (i.e., mobile network-based internet services) in direct competition with Maziv’s Fibre-to-the-Home (“FTTH”) services. Concerns were therefore raised by the Competition Commission (“Commission”) and the Tribunal that these competitive benefits would not materialise if the transaction proceeded, to the detriment of future competition.
In this note, we outline the economics underlying a potential competition theory of harm and highlight key learnings from the Vodacom/Maziv case in assessing such concerns.
Horizontal Effects and the Elimination of Potential Competition
A potential competition theory of harm arises when a merger eliminates a firm that would likely have entered, or significantly expanded in, the relevant market absent the merger (i.e., in the counterfactual). For example, if Firm A and Firm B operate in different markets, but Firm B is expected to enter Firm A’s market, its entry could increase competitive pressure in the market and drive prices lower, particularly if Firm A is not currently subject to effective competition. However, if a merger between Firm A and B removes this potential competitive constraint, the merged entity may have an incentive to raise prices or worsen its non-price offerings relative to the situation absent the merger.
For this to constitute a realistic theory of harm in the context of a merger, two key conditions must be met:
- First, it must be likely that absent the transaction, one of the merging parties would have entered, or significantly expanded in, the relevant market(s) in competition with the other firm.
- Second, such entry (or expansion) must be likely to appreciably enhance competition in the market(s) where one of the merging parties is active.
With this framework, we now consider how the potential competition theories of harm were addressed in the Vodacom/Maziv case, looking at the potential rollout of both fibre and FWA, before setting out key lessons.
Vodacom’s Potential Fibre Rollout as a Competitive Threat To Maziv
Assessing the Counterfactual Regarding Fibre Rollout
Assessing a potential competition theory of harm requires first identifying the most likely counterfactual scenario (i.e., what would have occurred if the merger did not proceed). In this case, a key question was whether, absent the transaction, Vodacom would have aggressively rolled out fibre infrastructure in competition with Maziv across the relevant markets. If not, then logically there can be no merit to this element of the potential competition theory of harm.
Before the merger, Vodacom had limited fibre infrastructure and offered minimal wholesale access to third parties. Its network included metro fibre links and limited FTTH links, which were available to third parties, as well as a small number of Fibre-to-the-Business (“FTTB”) links, which were not made available to third parties.
Although the state of competition prevailing at the time of the merger (i.e., the status quo) is generally used as the counterfactual, if credible evidence suggests that one of the merging parties is likely to expand or compete more aggressively absent the transaction, the counterfactual must reflect that change. However, in this regard, the CAC emphasised that “unless there is clear evidence that there is a dynamism in the market such as that change will happen, it does not behove the Tribunal to find material changes to a status quo, in the absence of clear evidence to that effect.”1
In contrast to both the Commission and the Tribunal, the CAC found that the available evidence did not support the claim that Vodacom was poised to become a large-scale fibre competitor to Maziv absent the transaction. The main evidence cited was a Maziv board pack from 2021, which included a SWOT analysis that “raised a concern that Vodacom could explore ‘other options’ if no deal was reached.”2
Yet, the CAC found this document unpersuasive when read in context, with Maziv’s witnesses indicating that it merely reflected a list of hypothetical and potential threats and Vodacom’s factual witnesses indicating this to be “no more than a loose threat made in the context of difficult negotiations.”3 The CAC also found that “no other evidence was produced to justify a conclusion that Vodacom would develop its own independent business in competition to Maziv [absent the transaction].”4
Assessing Competitive Harm
Even if Vodacom were to significantly expand its fibre network and begin offering wholesale services to third parties in the counterfactual (which the CAC ultimately found to be unlikely), this would not conclude the inquiry. For a potential competition theory of harm to be sustained from an economic perspective, it would also need to be established that DFA is not currently subject to effective competition in the relevant markets that Vodacom would be likely to enter, and that Vodacom’s entry would have enhanced competition in a meaningful way — benefits potentially lost due to the transaction.
In this case, the Tribunal took the view that there were separate markets for dark and lit fibre.5 Vodacom, pre-transaction, did not offer dark fibre services to third parties, but it did offer lit fibre services. However, the Tribunal’s adjudication of the potential competition theory of harm did not fully consider the type of fibre Vodacom was likely to offer absent the transaction.
Once the relevant fibre type was established, the Tribunal should then have examined the pre-merger competitive dynamics specific to that type. If Vodacom were to aggressively expand as a lit fibre provider rather than a dark fibre provider, evaluating whether the merger would harm competition requires considering the extent to which existing players are already constrained in the lit fibre segment.
Vodacom FWA Offering as a Potential Competitive Threat to Maziv
As indicated above, a second potential competition theory of harm concerned the possibility that, as a result of the transaction, Vodacom would have less incentive to prioritise its 5G rollout and to market FWA services in areas where Maziv offers wholesale FTTH services. The Tribunal found this concern to have merit.6
This theory of harm hinges on a specific market definition, namely that FTTH (a wholesale input for ISPs) and FWA (a retail product offered by mobile network operators) are part of the same relevant market and compete. In this regard, the Tribunal adopted an inconsistent approach. On a static basis, it found that the combination of Vodacom’s limited FTTH assets with Maziv’s would substantially lessen competition,7 particularly in areas where they were the only infrastructure providers. But this fails to account for the (alleged) competitive constraint posed by FWA (implied by the Tribunal’s market definition).
Moreover, even if FTTH and FWA were to be considered as part of a single relevant market (which we do not discuss in this note), the Tribunal did not consider all the available evidence on market participants, competitive dynamics and market shares in a combined FWA/fibre market. Without a proper analysis of this broader competitive landscape, it is difficult to credibly conclude that Vodacom’s alleged FWA expansion into areas served by Maziv’s FTTH would have materially enhanced competition.
Lessons Learned
A few important lessons emerge when assessing potential competition theories of harm:
- First, there must be clear and credible evidence that entry or significant expansion is likely. From an economic perspective, this would typically include evidence of due diligence, internal strategic planning, resource allocation, or other business preparations. If a firm was seriously contemplating entry or expansion, one would expect it to feature across multiple board documents and internal discussions, not only in a (potential) competitors’ SWOT analysis.
- Second, while strategic documents are important, they must be read in context and considered alongside other evidence. Board packs and investor presentations often serve strategic objectives, are curated to inform stakeholders such as investors, board members, or regulators, and may emphasise a wide array of risks or opportunities, regardless of their actual likelihood. As the CAC has noted, they can reflect the “puffery one might expect in a sales pitch”.8 Accordingly, caution must be exercised when focusing on individual slides or isolated statements. Broader trends or themes are generally better identified across multiple documents. Ultimately, competition economics requires a rigorous and objective assessment, considering a multitude of documents.
- Third, establishing likely entry is only the first step. If entry is found to be likely (a factual question), the next step is to assess whether that entry would materially enhance competition. This requires a detailed economic analysis of the relevant markets. Without such an analysis, it is not possible to determine whether the entry would have had a meaningful pro-competitive impact.
Conclusion
When assessing potential theories of harm in mergers, there are many complexities to consider. This note demonstrates that one of the key issues when considering potential competition is the importance of substantiating counterfactual entry with credible internal evidence and interpreting strategic documents in context. The Vodacom/Maziv transaction exemplifies this: the CAC found insufficient evidence of meaningful potential entry by Vodacom through independent fibre services, identified analytical gaps in the Tribunal's assessment, and approved this landmark deal.
Footnotes:
1: Competition Appeal Court (2025). Vodacom/Maziv. Case No: 260/CAC/Nov2024, para 31.
2: Competition Appeal Court (2025). Vodacom/Maziv. Case No: 260/CAC/Nov2024, para 32.
3: Competition Appeal Court (2025). Vodacom/Maziv. Case No: 260/CAC/Nov2024, para 32.
4: Competition Appeal Court (2025). Vodacom/Maziv. Case No: 260/CAC/Nov2024, para 34.
5: Competition Tribunal (2025). Vodacom/Maziv. Case No: LM148Dec 21, para 377.
6: Competition Tribunal (2025). Vodacom/Maziv. Case No: LM148Dec 21, para 567.
7: Competition Tribunal (2025). Vodacom/Maziv. Case No: LM148Dec 21, para 456.
8: Competition Appeal Court (2025). Vodacom/Maziv. Case No: 260/CAC/Nov2024, para 33.
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Published
November 06, 2025
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