Icasa prompted by law in approving Vodacom-Neotel licences transfer

THE Independent Communications Authority of SA (Icasa) would have acted unlawfully had it refused to authorise the transfer of crucial licences from Neotel to Vodacom in the way its competitors insisted on, the regulator argued in the High Court in Pretoria yesterday.

A proposed merger between cellular giant Vodacom and fixed-line operator Neotel has met fierce resistance from Vodacom’s competitors, who argue that it will give Vodacom access to much sought-after radio spectrum, enabling it to provide superfast 4G data download.

The competitors have also argued that the transfer would irreparably harm competition in the mobile market and, therefore, the interests of consumers. Later this month the Competition Tribunal will hold public hearings on the merger.

MTN, Cell C, Telkom and Dimension Data have challenged another aspect of the merger in court: Icasa’s decision to authorise the control of the all-important licences from Neotel’s shareholders to Vodacom’s.

They argued that Icasa had failed to consider what the transfer would mean for competition, something it was required to do by the act.

But Icasa defended its actions yesterday. Counsel Terry Motau SC, said the regulator was a “creature of statute” and so could do only what it was expressly empowered to do by legislation.

He said it was true that one of Icasa’s objectives under the Electronic Communications Act was to promote competition in the information and communications technology sector.

But this was a “generalised duty”. The act also set out the process to be followed when it came to considering competition issues: a market enquiry under section 67(4) of the act.

This was “the only power and mechanism given to Icasa, through which to promote competition”, said Mr Motau.

But this section required that there be regulations in place for how such a market inquiry would work. And at the time the application for approval of the transfer was made, no regulations had been passed.

He said if Icasa had refused to authorise the transfer on competition grounds, it would have been the other side, Vodacom and Neotel, who could have “rightly” gone to court.

Mr Motau said that Icasa did consider competition issues. But it “took the view” that, without a market inquiry, it could not determine them.

The regulator decided that it would be “premature” to conduct a market enquiry while the competition authorities were still busy scrutinising the merger.

The case continues today.