Commission approves part II of the acquisition of INMSA subject to conditions
August 15 2013
The Competition Commission ("Commission") has on 07 August 2013 approved, with conditions, part II of the acquisition of the Independent News & Media South Africa (Pty) Ltd ("INMSA") by two firms.
The first acquiring firm is Sekunjalo Independent Media (Pty) Ltd ("Sekunjalo"), a private firm incorporated in terms of the laws of the Republic of South Africa ("SA"). Sekunjalo is a newly incorporated entity and does not control any other firm either directly or indirectly.
The second acquiring is Newco, a newly formed entity to be incorporated in the Republic of Mauritius. In the Shareholders Agreement entered between China International Television Corporation ("CITVC") and China Africa Development fund ("CADF"), it is indicated that Newco shall be called Interacom Investment Holdings Limited.
The Commission approved with conditions part I of the merger on 25 July 2013. In that transaction, Sekunjalo and Public Investment Corporation (PIC) acquired 75% and 25%, respectively of the entire share capital in INMSA. PIC is however not acquiring control of INMSA as envisaged in the Competition Act; therefore PIC is not regarded as a party to the transaction.
In part II of the transaction Sekunjalo's shareholding is reduced from the initial acquisition of 75% in part I of the transaction to 55% shareholding in part II of the transaction.
The Commission found there are no horizontal overlap and/or a vertical overlap in the activities of the merging parties (i.e. Sekunjalo, Sekunjalo Investment, CITVC (acting through Newco) and INMSA). As a result of PIC's involvement in the proposed transaction, any likely horizontal or vertical overlap only arise in the event that the PIC exercises control as defined in sections 12 (2) of the Act over TMG and Naspers, and/or whether the 25% shareholding at INMSA confers control to it post-merger.
In the initial transaction, the Commission concluded that PIC does not currently exercise control over TMG or Naspers. As such, the Commission is of the view that it is unlikely that the proposed transaction will result in unilateral and vertical effects in any markets where the TMG, Naspers and INMSA are active. Similarly, the Commission did not deem it necessary to undertake a unilateral or vertical effects analysis as the proposed transaction does give rise to horizontal or vertical overlaps.
Notwithstanding the aforesaid, the shareholding interest held by PIC in three competing entities TMG, Naspers and INMSA post-merger raises concerns related to potential information exchange post-merger. The potential presence of the PIC on the board of directors of INMSA, Naspers and the TMG post-merger, could facilitate the sharing of competitively sensitive information among the three competing companies that could increase the likelihood of anticompetitive coordination between them.
The Commission concluded that it is necessary to impose conditions to address the likely competition concerns that may arise due to the cross-ownership of shares by PIC in competing entities. The conditions imposed by the Commission in the initial transaction aimed to address the possibility of PIC being in control of INMSA in whatever form post-merger and the possible information exchange that could arise as a result of PIC's shareholding and potential board representation at TMG, Naspers and INMSA.
Statement issued by Trudi Makhaya, Deputy Commissioner, Competition Commission, August 16 2013
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