LML4802
MAY JUNE PORTFOLIO Semester 1 2025
Unique #:
Due Date: 29 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, SECTION A: COMPETITION LAW
QUESTION 1
1.1.
The proposed acquisition by Starlink of a 70% share in Vodacom Ltd constitutes a
horizontal merger. This is because both entities operate within the
telecommunications sector, specifically in providing internet connectivity services.
Vodacom is a major mobile and internet services provider in South Africa, while
Starlink offers satellite internet globally. Though they use different technologies—
mobile broadband versus satellite internet—they target the same customer base
(households, businesses, and government) and fulfil the same need: internet access.
This means they operate in the same market, making them direct or potential
competitors.
Competition Evaluation Criteria
In terms of section 12A(1) of the Competition Act 89 of 1998, the first test is whether
the proposed merger is likely to substantially prevent or lessen competition. Several
key factors must be considered:
Import Competition: Starlink, as a foreign-based company, represents
international competition entering the South African market. While global
presence is an advantage, Vodacom’s deep integration into the South African
market could raise concerns about import substitution and dominance.
Ease of Market Entry: Telecommunications is a highly regulated industry in
South Africa, with licensing, infrastructure, and spectrum barriers. Starlink’s
approach to enter through acquisition rather than direct entry suggests high
barriers to entry, supporting the idea that this merger may consolidate market
power rather than stimulate new competition.
Market Concentration and Collusion: The South African telecoms market is
already concentrated, with a few major players—Vodacom, MTN, Telkom,
and Cell C—controlling a large market share. Starlink acquiring Vodacom
would eliminate the potential for new direct competition and increase
concentration.
Removal of an Effective Competitor: Starlink’s independent entry could
have introduced more competition and potentially lower prices. Its acquisition
of Vodacom removes the possibility of that competition, potentially harming
consumer choice.
Varsity Cube 2025 +27 81 278 3372
MAY JUNE PORTFOLIO Semester 1 2025
Unique #:
Due Date: 29 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, SECTION A: COMPETITION LAW
QUESTION 1
1.1.
The proposed acquisition by Starlink of a 70% share in Vodacom Ltd constitutes a
horizontal merger. This is because both entities operate within the
telecommunications sector, specifically in providing internet connectivity services.
Vodacom is a major mobile and internet services provider in South Africa, while
Starlink offers satellite internet globally. Though they use different technologies—
mobile broadband versus satellite internet—they target the same customer base
(households, businesses, and government) and fulfil the same need: internet access.
This means they operate in the same market, making them direct or potential
competitors.
Competition Evaluation Criteria
In terms of section 12A(1) of the Competition Act 89 of 1998, the first test is whether
the proposed merger is likely to substantially prevent or lessen competition. Several
key factors must be considered:
Import Competition: Starlink, as a foreign-based company, represents
international competition entering the South African market. While global
presence is an advantage, Vodacom’s deep integration into the South African
market could raise concerns about import substitution and dominance.
Ease of Market Entry: Telecommunications is a highly regulated industry in
South Africa, with licensing, infrastructure, and spectrum barriers. Starlink’s
approach to enter through acquisition rather than direct entry suggests high
barriers to entry, supporting the idea that this merger may consolidate market
power rather than stimulate new competition.
Market Concentration and Collusion: The South African telecoms market is
already concentrated, with a few major players—Vodacom, MTN, Telkom,
and Cell C—controlling a large market share. Starlink acquiring Vodacom
would eliminate the potential for new direct competition and increase
concentration.
Removal of an Effective Competitor: Starlink’s independent entry could
have introduced more competition and potentially lower prices. Its acquisition
of Vodacom removes the possibility of that competition, potentially harming
consumer choice.
Varsity Cube 2025 +27 81 278 3372
