| Fri 11 Feb 2011, 12:00 | | THEE - The Competition Commission - Competition Tribunal approves casino |
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JSE
THEE
THEE - The Competition Commission - Competition Tribunal approves casino
merger unconditionally
COMPETITION TRIBUNAL APPROVES CASINO MERGER UNCONDITIONALLY
(Following is a guideline for journalists. The information can be used but
please do not quote Nandi Mokoena or the Tribunal)
Today the Competition Tribunal unconditionally approved the proposed merger
between Tsogo Sun and Gold Reef Resorts. This decision follows an 8-day
hearing in which the Competition Commission recommended the approval of this
merger subject to the condition that the merged entity sell-off Silverstar
Casino in order to maintain competition in the Gauteng casino gaming market.
Tsogo Sun and Gold Reef, however, argued that competition would not be
lessened by the merger and so it was not necessary to divest from Silverstar.
Background
Tsogo Sun and Gold Reef Resorts are both national casino operators and
through this transaction Tsogo Sun will acquire Gold Reef Resorts. Tsogo Sun
is involved in the hotel and gaming markets and has various casinos located
all around the country including Montecasino in Johannesburg, Gauteng. Gold
Reef Resorts also has various interests in the casino gaming industry in
South Africa. In Gauteng, Gold Reef Resorts owns Gold Reef City and
Silverstar Casino located in Johannesburg South and Krugersdorp respectively.
The Commission assessed the merger in order to determine if it would
substantially lessen competition in the casino gaming market, if approved.
According to the Commission, while the merger presented no significant
concerns in the rest of South Africa, the merger would lessen competition
within the Gauteng casino market. The Commission alleged that Silverstar, in
particular, offered a competitive alternative to Montecasino and the merger
would lead to the elimination of Silverstar as a competitor. The Commission
submitted that, in the absence of effective competition, this would give the
new merged entity an incentive to raise prices or degrade its product
offering after the merger.
The Commission therefore recommended that the Tribunal approve the merger
between Tsogo Sun and Gold Reef Resorts on condition that Tsogo Sun sell off
Silverstar Casino.
The merging parties, however, were of the view that casinos drew customers
from their own local catchment areas and therefore didn`t compete with each
other. Accordingly the merging parties did not believe the merger would
result in a lessening of competition and they opposed the proposed
divestiture of Silverstar.
During the course of the hearing, which took place over 8 days from 6
December to 9 February, the Tribunal heard evidence from witnesses from the
Commission, the merging parties, rival casino companies and economic experts.
Having considered these arguments, the Tribunal decided to approve the merger
without any conditions. In order to allow the merging parties to meet certain
commercial deadlines, the Tribunal issued its decision in this case earlier
today. At a later stage the Tribunal will provide reasons for its finding.
Issued By:
Nandi Mokoena
PR Consultant: Competition Tribunal
Cell: +27 (0) 82 399 1328
E-mail: NandisileM@live.co.za
On Behalf Of:
Lerato Motaung
Registrar: Competition Tribunal
Tel: (012) 394 3355
Cell: +27 (0) 82 556 3221
E-Mail: LeratoM@comptrib.co.za
Date: 11/02/2011 12:00:09 Produced by the JSE SENS Department.
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