The Competition Commission's Market Inquiry into Data Services

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Antitrust/Competition & Marketing Bulletin
September 12, 2017


On 18 September 2017, the Competition Commission is expected to commence a market inquiry into data services in South Africa. This is the sixth market inquiry to be initiated by the Commission.

The inquiry comes after public submissions to Parliament that South Africa’s data costs are high relative to other developed and developing countries, with the burden falling disproportionately on the poor1. In his 2017 State of the Nation Address, President Jacob Zuma assured the public that “the lowering of the cost of data is uppermost in our policies and plans,”2 indicating that addressing these concerns is a priority of government.

What is the scope of the Commission’s market inquiry?

The Commission’s Terms of Reference (published on 18 August 2017) identify the following main objectives of the inquiry:

• to understand the data services value chain;
• to identify areas of market power and structural, behavioural and regulatory factors that may influence competition or pricing. Factors such as the impact of the current regulatory regime, strategic behavior by large incumbent firms, investment in and sharing of network infrastructure, and access to allocation of spectrum, are mentioned specifically;
• to benchmark South African data services pricing against those of other countries; and
• to establish whether data supply quality and coverage is adequate by international standards and the country’s developmental needs.

The Commission has identified two outcomes of the market inquiry, namely to make recommendations to:

• government regarding how to increase competitiveness and inclusivity in the market; and
• the sector regulator (ICASA) on the competitive impact of the regulatory framework and any need for amendments.

Which stakeholders are expected to be affected by the market inquiry?

In its Terms of Reference, the Commission indicates that the market inquiry’s participants will include all firms directly or indirectly involved in the data services value chain, as well as firms that have an impact on competition in the sector. The Commission identifies the following broad categories of participants:

• business;
• trade associations;
• government departments;
• public entities;
• regulatory authorities;
• consumers and consumer groups; and
• members of the public.

In 2016, ICASA announced that it would conduct a market inquiry into priority markets in the electronic communications sector, aimed at identifying those markets that warrant ex ante regulation. The Commission’s Terms of Reference indicate that the Commission expects to engage with, and make recommendations to, ICASA as the sector regulator.

What should affected firms expect during the inquiry?

The Commission will establish a team to deal with the inquiry that will consist of Commission staff, as well as subject matter experts as and when required.

The Terms of Reference are not specific on precisely how the inquiry will be conducted. However, the team may gather and assess information from relevant stakeholders by any combination of:

• Questionnaires;
• Information requests;
• Calls for written and/or oral submissions;
• Targeted meetings with industry participants, and
• Public hearings.

ICASA anticipates that its market inquiry will be finalised on or before 31 March 2018 and the Commission anticipates that its inquiry will be completed by 31 August 2018. Both inquiries will involve extensive public involvement and the publication of interim reports for public comment, followed by the publication of final reports.


1See, e.g., #DataMustFall – how cellphone giants are milking you, Thalia Holmes, 29 August, MAIL & GUARDIAN, available at: https://mg.co.za/article/2016-09-23-00-datamustfall-how-cellphone-giants-are-milking-you/.
2State of the Nation Address, 2017, available at: http://www.gov.za/speeches/president-jacob-zuma-2017-state-nation-address-9-feb-2017-0000.