LML4802
Assignment 1 Semester 2 2025
Unique #:
Due Date: August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, The Competition Act 89 of 1998 (“the Act”) regulates mergers in South Africa to
ensure that concentration of economic power does not undermine competition or
harm public interest. In this case, Starlink, a US-based company owned by SpaceX,
seeks to acquire 70% of Vodacom Ltd, a leading South African telecommunications
operator. This transaction raises important issues of merger classification,
competitive assessment, and public interest considerations in line with sections 11
and 12A of the Act.
A merger is defined in section 12 of the Act as occurring when one or more firms
acquire direct or indirect control over the whole or part of the business of another
firm.1 The Competition Appeal Court in Distillers Corporation (SA) Ltd v Bulmer (SA)
(Pty) Ltd confirmed that this definition is deliberately wide and includes acquisitions
of shares or assets as well as combinations of firms into a new entity. 2 Since Starlink
intends to acquire a controlling shareholding in Vodacom, this constitutes a merger
as envisaged by the Act.
This merger is best classified as a horizontal merger, since both Vodacom and
Starlink operate in the same telecommunications and internet connectivity market.
Vodacom is an established player in mobile network services and data provision in
South Africa, while Starlink seeks to provide satellite-based internet services.
Although the modes of delivery differ, both firms compete in the provision of internet
services to consumers. The consequence of a horizontal merger is a reduction in the
number of independent competitors in the market, which requires careful
assessment of whether the merger will substantially prevent or lessen competition.
Section 12A(1) of the Act sets out the framework for merger evaluation. The central
inquiry is whether the merger will substantially prevent or lessen competition.3
Factors to be considered include barriers to entry, the history of collusion in the
industry, the level of concentration, and whether the merger removes an effective
competitor.4
In the present case, the South African telecommunications market is already highly
concentrated, dominated by Vodacom, MTN, and Telkom. Allowing Vodacom to
1
Competition Act 89 of 1998, s 12A(2).
2
Distillers Corporation (SA) Ltd v Bulmer (SA) (Pty) Ltd 2002 (2) SA 346 (CAC).
3
Competition Act 89 of 1998, s 12A(2).
4
Competition Act 89 of 1998, s 12A(2).
Varsity Cube 2025 +27 81 278 3372
Assignment 1 Semester 2 2025
Unique #:
Due Date: August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, The Competition Act 89 of 1998 (“the Act”) regulates mergers in South Africa to
ensure that concentration of economic power does not undermine competition or
harm public interest. In this case, Starlink, a US-based company owned by SpaceX,
seeks to acquire 70% of Vodacom Ltd, a leading South African telecommunications
operator. This transaction raises important issues of merger classification,
competitive assessment, and public interest considerations in line with sections 11
and 12A of the Act.
A merger is defined in section 12 of the Act as occurring when one or more firms
acquire direct or indirect control over the whole or part of the business of another
firm.1 The Competition Appeal Court in Distillers Corporation (SA) Ltd v Bulmer (SA)
(Pty) Ltd confirmed that this definition is deliberately wide and includes acquisitions
of shares or assets as well as combinations of firms into a new entity. 2 Since Starlink
intends to acquire a controlling shareholding in Vodacom, this constitutes a merger
as envisaged by the Act.
This merger is best classified as a horizontal merger, since both Vodacom and
Starlink operate in the same telecommunications and internet connectivity market.
Vodacom is an established player in mobile network services and data provision in
South Africa, while Starlink seeks to provide satellite-based internet services.
Although the modes of delivery differ, both firms compete in the provision of internet
services to consumers. The consequence of a horizontal merger is a reduction in the
number of independent competitors in the market, which requires careful
assessment of whether the merger will substantially prevent or lessen competition.
Section 12A(1) of the Act sets out the framework for merger evaluation. The central
inquiry is whether the merger will substantially prevent or lessen competition.3
Factors to be considered include barriers to entry, the history of collusion in the
industry, the level of concentration, and whether the merger removes an effective
competitor.4
In the present case, the South African telecommunications market is already highly
concentrated, dominated by Vodacom, MTN, and Telkom. Allowing Vodacom to
1
Competition Act 89 of 1998, s 12A(2).
2
Distillers Corporation (SA) Ltd v Bulmer (SA) (Pty) Ltd 2002 (2) SA 346 (CAC).
3
Competition Act 89 of 1998, s 12A(2).
4
Competition Act 89 of 1998, s 12A(2).
Varsity Cube 2025 +27 81 278 3372
