ISPA committed to scrapping of BCX deal

19 December 2006

The Internet Service Providers’ Association of SA (ISPA) reaffirms its commitment to halting Telkom’s proposed acquisition of a controlling stake in Business Connexion (BCX).

Following representations by ISPA and other parties earlier this year, the Competition Commission recommended to the Competition Tribunal that Telkom’s proposed acquisition of BCX be prohibited.

The Competition Tribunal acts independently and adjudicates competition matters in accordance with the Competition Act. When a merger is referred to the Competition Tribunal by the Competition Commission, it may approve, conditionally approve or prohibit the merger.

“Following a pre-hearing held recently at the Competition Tribunal, a time-frame has been agreed upon between the various parties for the processes which will culminate in a hearing before the Tribunal,” said Ant Brooks, ISPA’s General Manager. ISPA intends to continue its involvement in the matter and has recommended a prohibition on the merger to the Competition Tribunal.

“Counsel has been briefed and ISPA will continue to prosecute the matter until a favourable decision has been reached,” added Mr Brooks.

The basis of ISPA’s objection to the proposed merger is that the transaction would aggravate an unfair situation because Telkom has a reputation for cross-subsidising valued-added services with income from its basic telephony monopoly. The result of cross-subsidisation is higher charges across a range of services.

“Protecting the individual Internet consumer is as important to ISPA as serving the interests of its members. The South African consumer will be top of mind as ISPA continues its opposition to Telkom’s proposed acquisition,” said Mr Brooks.

Should the Tribunal prohibit the proposed merger, Telkom could lodge an appeal at the Competition Appeal Court which has a status similar to that of a High Court. The Competition Appeal Court may consider any appeal following a decision of the Competition Tribunal and confirm, amend or set aside the decision.

The Internet Service Providers’ Association is a South African Internet industry body incorporated not for gain. ISPA currently has about 120 members, comprised of large, medium and small Internet service and access providers in South Africa. Formed in 1996, ISPA has historically served as an active industry body, facilitating exchange between the different independent Internet service providers, the Department of Communications, ICASA, operators and other service providers in South Africa.