Competition Commission Lays Perjury Charge Against a Vodacom Executive
PRESS STATEMENT
24 July 2008
Competition Commission lays perjury charge against a Vodacom Executive
The Competition Commission has laid charges with the SAPS against a Vodacom Executive for committing an offence in terms of section 73 of the Competition Act. Section 73 provides that it is an offence to knowingly provide false information to the Commission.
The charges were laid on Wednesday 23 July at Sunnyside Police Station in Pretoria.
The Commission believes that the Executive committed a criminal offence in that she intentionally provided false information to mislead the Commission, in contravention of the Competition Act.
The penalty for these offences is a maximum prison sentence of 6 months or a fine of R2000.00 or both.
Facts and background
On 20 December 2007, the Commission received notification of a large merger between Vodacom Service Provider Company (VSPC), a subsidiary of Vodacom, and Global Telematics SA (Pty) Ltd and Glocell Service Provider Company (Pty) Ltd. In terms of the structure of the transaction, VSPC was to acquire the business of Glocell. As part of the merger filing the Executive signed a certificate of accuracy on behalf of Vodacom declaring that the information submitted to the Commission in respect of the merger was true and correct.
Upon completing its investigation the Commission made a recommendation to the Competition Tribunal for an unconditional approval of the transaction.
At the hearing before the Tribunal on 6 March 2008, the Tribunal requested Vodacom and Glocell to provide it with all board minutes relating to the acquisition of Glocell by Vodacom.
During its investigation of the transaction Vodacom had failed to provide the Commission with these documents, despite requests for them to do so. The Commission was led to believe that these documents did not exist. However, after the Tribunal ordered Vodacom to provide the documents, they were submitted on 10 March 2008.
The matter was subsequently approved by the Tribunal, but the Tribunal expressed misgivings about Vodacom’s truthfulness during the investigation of the transaction. The Tribunal stated that it believed that the information was deliberately withheld from the Commission. In particular, the Tribunal noted that the strategic rationale as contained in the board minutes of Vodacom differed substantially with the rationale submitted to the Commission.
The Commission subsequently investigated the matter and found that the rationale for the transaction was to eliminate Glocell because it was providing discounts to customers in competition with Vodacom and other Vodacom service providers. Contrary to this, the rationale submitted by Vodacom to the Commission was primarily driven by the declining growth of the service provider market and the desire by Vodacom to consolidate its service delivery chains in line with worldwide trends to have management over the delivery of a more uniform consistent service to its customers.
It is clear from Vodacom’s documents that the transaction was intended to in fact take out a company that was providing competition and threatening its margins. Accordingly, the Commission believes that grounds existed for referring this matter to the criminal prosecution authorities for charges.
The Commission has a responsibility to protect the integrity of the competition authorities’ decision making. This integrity will be seriously undermined if individuals and companies are able to mislead the authorities without any consequences.
ENDS
Prepared by: FD Beachhead
Dani Cohen 082 897 0443 /
Jennifer Cohen 082 468 6469/
Senzi Dlamini 073 494 0030 /
On behalf of: The Competition Commission
Further info:
Tembinkosi Bonakele, Head of Mergers and Acquisitions Division
012 394 3294 / 079 872 3659