Icasa in legal ring of fire over Vodacom-Neotel merger

THE Independent Communications Authority of SA (Icasa) got “its wires crossed” and approved the merger between Vodacom and Neotel instead of the transfer of control of licences, Telkom’s legal representative told the High Court in Pretoria yesterday.

Vodacom’s competitors, Telkom, MTN, Cell C and Dimension Data, are challenging an aspect of the merger — Icasa’s approval of the transfer of three crucial licences from Neotel’s shareholders to Vodacom’s.

The transfer will give Vodacom access to much sought-after radio spectrum, which competitors say will enable it to provide super-fast 4G data downloads and cause irreparable harm to competition.

The merger has been the subject of a prolonged scrutiny by regulators. The Competition Commission took more than a year to recommend its approval, with conditions, and the Competition Tribunal is still to hold public hearings on it later this month.

Cassie Badenhorst SC, for Telkom, said that, when Icasa granted its approval, it had approved the wrong thing. Icasa only had authority to approve transfer of control of the licences.

Instead, it had “got its wires crossed” and had approved the merger, which only the Competition Commission was entitled to do, Mr Badenhorst said, adding that Icasa had exceeded its authority and created a decision that could not stand. “They overstepped their jurisdiction,” he said.

Counsel for MTN Alfred Cockrell SC said the regulator was duty-bound by its governing legislation to consider competition issues when it decided to approve the transfer. Instead, it had “simply crossed out” the requirement.

“It was like they took a bottle of Tipp-Ex,” he said.

Mr Cockrell said Icasa’s decision to “defer” to the Competition Commission on this issue did not mean that it had ticked the box of considering competition. “It simply passed the buck,” he said.

He also accused Icasa of “regulatory schizophrenia”. On the one hand, Icasa said it needed regulations to consider competition issues and that these regulations had not yet been enacted. On the other hand, Icasa said it did not need regulations to approve the transfer, Mr Cockrell said. Icasa’s justifications for closing its eyes to competition amounted to a material mistake of law, he added.