South Africa’s Competition Commission (CompCom) has recommended the conditional approval of Telkom’s acquisition of IT services group Business Connexion (BCX) to the country’s Competition Tribunal, TechCentral writes. The CompCom said it had found that the merger will result in the merged entity having the ability and incentives to engage in bundling strategies that may result in anticompetitive effects. To address these concerns, the antitrust authority has recommended that certain conditions are imposed on the new enlarged entity, with Telkom/BCX required to: ensure that the prices for wholesale leased lines are based on actual lines utilised; ensure that the prices for the other services and/or components included in the bundle are based on actual costs incurred; ensure that it does not set prices for its bundled offerings using wholesale leased lines at levels which are less than the sum of the costs of the components in the bundle; and ensure that when providing any bundled offering which includes wholesale leased lines, the price for each individual service included in the bundle is clearly reflected in the overall price for the bundle.
As previously reported by TeleGeography’s CommsUpdate, in May 2014 Telkom proposed to buy the Johannesburg-listed BCX for ZAR2.7 billion (USD250.84 million) and delist it from the bourse. The move represented the second time in seven years that the South African telco has made an offer to buy out BCX; the transaction was previously blocked by CompCom due to the impact a potential Telkom/BCX merger would have on competition.