Telecommunication and the allocation of scarce resources and / or essential facilities in terms of the Competition Act 98 of 1998 of South Africa

Abstract

This dissertation aims to evaluate the allocation of essential facilities and / or scarce resources in the telecommunication industry in terms of the abuse of dominance provisions under the Competition Act 98 of 1998. Chapter 1 sets the scene by setting out the history of competition law in South Africa, and the policy considerations that lead to the promulgation of the Competition Act 98 of 1998 in its current form. This is followed by a brief examination of the scope, purpose and application of the Act, including the conduct regulated by the Act. Chapter 1 explores the functions of the Competition Authority in South Africa, and the various enforcement bodies created under the Act. In order to provide context, and to introduce the telecommunication industry, the dissertation briefly discusses concurrent jurisdiction between the Competition Authority and the Telecommunication Regulatory Authority (ICASA). Chapter 1 concludes with a description of radio frequency spectrum; and sets out the scope of the dissertation. Chapter 2 sets out the market definition for radio frequency spectrum, which is defined broadly as the national product market for radio frequency spectrum. The dissertation is limited to the telecommunication industry, thus the market definition is defined only within the context of this industry. After setting out the market definition and identifying the key players in the market for radio frequency spectrum in the telecommunication industry, the dissertation proceeds to discuss the abuse of dominance provisions under the Competition Act, the essential facilities doctrine and scarce resources under the Act. This discussion includes a description of how the doctrine of essential facilities was introduced into our law, a discussion of the relevant case law and a comparative approach of the

status in the European Union and the USA. The concept of abuse of dominance and its application in South Africa, the European Union and the USA is described. In conclusion, Chapter 3 compares essential facilities and scarce resources. It is submitted that radio frequency spectrum is a scarce resource and should be dealt with under the abuse of dominance provisions of the Competition Act. Chapter 4 analyses the allocation of radio frequency spectrum in South Africa. It describes the Regulatory Authority and the empowering provisions under the Electronic Communications Act, under which ICASA is empowered to allocate radio frequency spectrum, including the recent policy directions of the Department of Communication. A discussion of the various competition issues that could influence the allocation of radio frequency spectrum follows, specifically with regard to the recent policy directions of the Department of Communications. A brief summary of the views of some of the main industry players in South Africa on the policy directions sets out the concerns of the industry in general, and their reaction to the policy directions. In the concluding Chapter, it is submitted that the abuse of dominance provisions of the Competition Act should be applicable to the allocation of radio frequency spectrum. The reason for this statement is that ICASA often obtains a de facto dominant position with regard to the allocation of an essential facility and / or a scarce resource, such as radio frequency spectrum. Thus it is submitted that the regulator is in a position of dominance which allows it to use regulation as a tool to act anti-competitively. The final Chapter concludes that a wider interpretation of the abuse of dominance provisions is necessary to ensure fair and efficient allocation of radio frequency spectrum. A brief discussion of the policy directions suggests that although, on the face of it, the directions are in line with the provisions of the Competition Act, the method of allocation has scope for anti-competitive allocation by a de facto dominant regulatory authority. It is submitted that more attention must be paid to the actual methods of allocation of radio frequency spectrum, and that a fine balance is required to ensure that spectrum allocation is transparent and efficient. In closing, the dissertation mentions the Electronic Communications Amendment Bill (Government Gazette No. 35525 18 July 2012), which aims to introduce a Spectrum Management Agency to oversee the allocation of radio frequency spectrum in the future.