| Wed 7 Dec 2011, 14:26 | | THEE - The Competition Commission - Competition Commission prohibits knock and |
|
JSE
THEE
THEE - The Competition Commission - Competition Commission prohibits knock and
drop distribution merger
MEDIA RELEASE
07 December 2011
Competition Commission prohibits knock and drop distribution merger
The Competition Commission has prohibited the acquisition of Primedia@Home, a
printed advertisement distribution business of Primedia (Pty) Ltd, by Paarl
Media (Proprietary) Limited ("Paarl"), jointly controlled by Media 24 Limited
and Lambert Phillips Retief. The Commission found that this transaction would
substantially lessen competition in the market for knock and drop leaflet
distribution.
This transaction was previously approved by the Commission on 25 January 2011;
however, Caxton and CTP Publishers and Printers Ltd ("Caxton") asked the
Competition Tribunal ("Tribunal") to review it. On 25 July 2011, the Tribunal
set aside the Commission`s decision to unconditionally approve the merger and
the matter was sent back to the Commission for its reconsideration.
The new investigation uncovered further information, including strategy
documents that were not previously submitted to the Commission by the merging
parties. This information indicated that there was vigorous competition between
the merging parties, being the two main national players in the market for knock
and drop leaflet distribution. This is contrary to the arguments made by the
merging parties that they competed in a broader market which included community
newspapers and other media. The Commission`s investigation concluded that the
merger will thus substantially lessen competition.
The Commission further took into account that this market is highly concentrated
with significant barriers to entry which makes it difficult to enter the knock
and drop distribution market and be an effective competitor at a national level.
Consideration of the ability of those in other distribution modes, like
newspapers, to perform knock-and-drop distribution nationally indicates that
this constraint is not significant and highly unlikely to materialise.
In addition, the merged entity (through Paarl) has a leading position in
printing, particularly heatset printing and will, by virtue of the transaction,
be in a position to leverage its position in distribution into the printing
market, and foreclose its rivals in printing and distribution, to the detriment
of competition in these markets.
ENDS
For further details contact:
Molebogeng Taunyane, Coordinator: External Communication
012 394 3289/082 646 8663/ molebogengt@compcom.co.za
Date: 07/12/2011 14:26:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
