The R500m SABC/MultiChoice deal must be scrutinised by the Competition Commission

2 Oct 2018

By: PBM

The Competition Commission has been granted a right to scrutinise the controversial R500 million deal between  the South African Broadcasting Corporation (SABC) of Hlaudi Motsoeneng days and pay television operation MultiChoice.

This results from an order granted by the Constitutional Court after it was approached by the Competition Commission and SOS Support Group.

In a statement released today the Commission said it welcomes the Constitutional Court’s unanimous judgment in favour of the Commission and the S.O.S Support Group.

The matter was about whether or not the Commercial and Master Channel Distribution Agreement concluded between the SABC and Naspers’ subsidiary, MultiChoice, resulted in a (unnotified) merger and as a result the Commission had to investigate it.

The Constitutional Court granted leave to appeal and upheld the appeal against the Competition Appeal Court order which sought to limit the Commission’s investigative powers.

The Commission sought to protect and safeguard its powers to investigate whether any (acquisition) transaction constitutes a notifiable merger.

“We are very pleased the court has confirmed this important principle and cleared up the ambiguity about our power to investigate whether a merger had been implemented without notification. We will work very hard to make sure we conclude the investigation within the 30 days stipulated by the court and submit our findings to the Tribunal,” says Competition Commissioner Tembinkosi Bonakele.

The Constitutional Court set aside the Competition Appeal Court order of 28 April 2017. This paves the way for the Commission to investigate the Commercial and Master Distribution Agreement. This agreement is of significant public interest as Multichoice undertook to pay the SABC fees of more than R500 million in exchange for which the SABC agreed the following:

  1. The SABC entertainment channel, to be broadcasted exclusively on the Multichoice platform, would consist mainly from content from the SABC’s substantial archive of programs; and
  2. The SABC would not encrypt any of its free to air channels in South Africa’s migration to digital terrestrial television.

The importance of the Constitutional Court’s judgement is that it vindicates and reasserts the Commission’s investigative powers to determine whether transactions constitute or give rise to a notifiable merger as defined in the Act.

In essence, the judgement addressed a potential lacuna (a gap in the law) in the Competition Act, because the Act in its current form does not contain an express provision authorising the Commission to initiate a complaint relating to whether a transaction constitutes a notifiable merger.

news@ujuh.co.za

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