| Mon 12 Feb 2007, 11:00 | | GEN - Competition Tribunal - Tribunal unconditiona |
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JSE
GEN
GEN - Competition Tribunal - Tribunal unconditionally approves
Nail/Capricorn/Primedia merger
PRESS RELEASE
Tribunal unconditionally approves Nail/Capricorn/Primedia merger
The Competition Tribunal has today 12 February 2007, dismissed the Competition
Commission`s decision to attach conditions to the merger between Primedia,
Capricorn Capital Partners and New Africa Investments Ltd (NAIL) and
unconditionally approved the merger.
The Competition Commission`s decision to conditionally approve the *intermediate
merger was taken on appeal by the parties to the Tribunal.
On 29 July 2005, the merging parties filed an intermediate merger notification
with the Commission to acquire 100% of the issued ordinary shares and the entire
issued "N" ordinary shares in New Africa Investments Ltd (NAIL) from the Tiso
Consortium. After having considered the proposed transaction the Commission was
concerned about post-merger control and approved the merger subject to
conditions which would prevent information-sharing.
The merging parties asked the Tribunal to unconditionally approve the merger or
alternatively to approve the merger subject to conditions they had tendered
which were a redraft of the Commission`s conditions but in their opinion less
onerous
In the appeal proceeding before the Tribunal, the Commission changed its
position and asked for prohibition of the merger as did an intervenor, AME an
owner of radio stations.
The Competition Tribunal in its reasons for its decision says,"The direct
consequences of the merger are uncontroversial and raise no competition or
public interest concerns. Nail is a holding company that has historically held
many investments in many areas, primarily media and financial services.
Presently, it is a cash shell and has only one investment to consider - a 24,9%
stake in the Kaya FM, held via its own wholly owned subsidiary, New Africa Media
Holdings. Kaya owns a radio station known as Kaya FM. It is this indirect
acquisition of an interest in Kaya that has created controversy - not from the
point of view of Capricorn, which is a financial services firm, but because
Primedia owns substantial radio assets
However the focus of concern is the fact that Nail has only one asset a 24,9%
stake in Kaya FM. In terms of the arrangements between Primedia and Capricorn
although they will share in the Nail 50-50 in respect of the Kaya FM stake, it
has been agreed that Primedia would manage the asset, and that this shareholding
would not be split 50-50 but 73-27 in favour of Primedia".
Although most of the proceedings had addressed whether Primedia stations
competed with Kaya FM the Tribunal made its decision on the ground that as
Primedia could not control Kaya FM with a 18.1% stake, "it is unnecessary for us
to consider, whether, if it had acquired control, this would lead to an
anticompetitive outcome".
Since Primedia has only 18.1% stake in Kaya FM it"does not enjoy control over
Kaya, there is no justification for imposing conditions on the acquisition. Had
Primedia been able to exercise control over Kaya, it may well be that
prohibition or the imposition of conditions may have been justified. Absent
proof of an ability of control we cannot justify coming to such a conclusion".
The Tribunal considered various ways in which Primedia might control Kaya FM and
after analyzing them all considered it was unlikely to be able to do so either
on its own nor were the other shareholders likely to collude with Primedia as
there interests would not be served by such a co-ordination.
The Tribunal says,"We wish to make it quite clear that this decision simply
approves the acquisition of control by Capricorn and Primedia over Nail. It does
not consider that there has been an indirect change of control in respect of
Kaya, as Nail never had such control and the merger will not change that
position. However, if Nail or Primedia ever acquires control over Kaya, it will
be required to notify that to the Competition Commission as a merger assuming it
meets the threshold of notification. As this is an obligation required by law
there is no reason to make it a condition of the present merger.
*The Competition Commission has the authority to approve or prohibit
intermediate mergers (but not large mergers which are referred to the Tribunal
for adjudication). In the case of intermediate mergers the Tribunal adjudicates
appeals from the Competition Commission. In the case of large mergers the
Competition Appeal Court adjudicates appeals from the Competition Tribunal.
The full decision will be posted on the Tribunal website: www.comptrib.co.za
Issued by: Jane Sussens
Communications Advisor
The Competition Tribunal
Tel: (011) 483 2687
Cell: 082 920 0875
Fax: (011) 483 2686
E-Mail: jane.sussens@mweb.co.za
On Behalf of: Lerato Motaung
Registrar
The Competition Tribunal
Tel: (012) 394 3355
Cell: 082 556 3221
E-Mail: leratom@comptrib.co.za
Date: 12/02/2007 11:00:02 Produced by the JSE SENS Department.
