The important task of merger control by South African competition authorities is naturally a matter of public interest to South Africans.
For this reason, the Competition Commission regularly communicates its decisions to the public while highlighting grounds considered prior to it making a determination on mergers. Clarifying our important task, the order of the Constitutional Court in Mediclinic stated that “institutions created to breathe life into these critical provisions of the act must therefore never allow what the act exists to undo and to do, to somehow elude them in their decision-making process. The equalisation and enhancement of opportunities to enter the mainstream economic space, to stay there and operate in an environment that permits the previously excluded as well as small and medium-sized enterprises to survive, succeed and compete freely or favourably must always be allowed to enjoy their pre-ordained and necessary pre-eminence.”
One, however, suspects that readers might not be aware that the Competition Commission’s work does not end after we have approved intermediate or small mergers or made recommendations to the tribunal on large merger transactions. In fact, we continue to monitor that conditions agreed upon by the merger parties are met.
For example, close to a year ago, the commission recommended that the Competition Tribunal approve the transaction whereby Groupe Canal+ SAS intended to acquire MultiChoice Group Limited (MCG), with conditions. The recommendation followed the commission’s investigation of the large merger as prescribed by the Competition Act 89 of 1998, as amended.
Following our investigation of the proposed merger, the commission was of the view that the transaction was unlikely to substantially lessen or prevent competition in any market. However, in recognition of the important role played by the MCG within the broader audiovisual ecosystem in South Africa and to address public interest concerns raised by various stakeholders, the commission had recommended approval of the merger subject to a number of conditions.
Let me unpack some of the conditions we imposed on this merger transaction and what they mean for job preservation and consumers alike.
Safeguarding local jobs remains a vital concern for the commission, and importantly, the merger parties agreed to a moratorium on retrenchments for a period of three years after the merger implementation date.
The merger parties also committed that the majority of MultiChoice (Pty) Ltd (“LicenceCo”) shareholders will be historically disadvantaged persons (HDPs) and workers - greatly expanding worker ownership for employees. Moreover, the parties agreed to continue certain corporate social responsibility initiatives such as skills development in the audiovisual industry and sports development. In addition, Canal+ undertook that MCG would remain incorporated and headquartered in South Africa and endeavour to promote exports.
The merged entity had also made supplier development commitments that include expenditure on local audiovisual content, the promotion of South African audiovisual content in new markets, and procurement from HDPs and small, medium and micro enterprises (SMMEs).
Some would recall that late last year allegations surfaced in the media about a communique to service providers relating to supplier invoices. When brought to its attention, the commission immediately initiated an investigation and contacted the relevant parties demanding requisite information. The investigation was finalised and Canal+ has since corrected its conduct.
The commission is committed to ensuring that the conditions of this, and other conditionally approved, merger transactions are being met by merger parties.
• Makunga is spokesperson for the Competition Commission
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