The Competition Commission says 20 government departments are the subject of investigations into the Vodacom contract.
The commission says the South African communication company is being investigated for abuse of dominance after it secured a tender with the National Treasury a year ago.
Officials from the commission say Vodacom became the sole provider of mobile telecommunications services to various government departments.
“Before Vodacom entered into the exclusive four-year agreement with the National Treasury, all government departments could buy purchase mobile telecommunications from any mobile network operator,” commission spokesman Sipho Ngwenya said.
Ngwenya said the “exclusionary abuse of dominance” by Vodacom was in contravention of the Competition Act.
The commission believes:
– Vodacom’s contract will entrench their dominance,
– Create barriers to enter the market,
– Distort competition,
– And result in loss of market share for other network operators.
“The Act prohibits a dominant firm from abusing its dominance by requiring or inducing a supplier or customer to not deal with a competitor and engaging in exclusionary act that impedes or prevents other 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,” Ngwenya said.
The company says they were shocked by the news of the Competition Commission investigating but says they will cooperate with the investigations.
“The tender process was initiated and controlled by National Treasury through its procurement officer with the award based on various elements including cost savings, quality of service, security, coverage, support and billing, quality of network and technology innovation,’ it said.
“One of the key objectives of which was to reduce Government’s communication costs.”
(edited by MLM)
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