The Competition Tribunal has dismissed an exception application brought by MultiChoice in a case involving an alleged notifiable merger between MultiChoice and the South African Broadcasting Corporation (SABC).
The case arises from a complaint lodged by Caxton and CTP Publishers and Printers Limited, the S.O.S Support Public Broadcasting Coalition and the Media Monitoring Project Benefit Trust (the applicants). The applicants allege that a Commercial and Master Channel Distribution Agreement (the agreement), concluded between MultiChoice and the SABC in 2013, constituted a notifiable merger under the Competition Act (Act), and that the parties failed to notify the Competition Commission (Commission) as required by the Act.
In terms of the agreement, the SABC agreed to let MultiChoice carry its unencrypted free-to-air channels on MultiChoice’s subscription platforms, i.e. M-Net, in exchange for payment, with a clause allowing MultiChoice to terminate or suspend the agreement and claim a refund if the SABC encrypted its free-to-air channels.
Context
In February 2015, the applicants approached the Tribunal for an order to compel MultiChoice and the SABC to notify the agreement as a merger. MultiChoice and the SABC opposed the application. The Tribunal dismissed the application in February 2016, finding that the applicants had not demonstrated that the agreement constituted a notifiable merger. The applicants appealed to the Competition Appeal Court (CAC) which, based on the available evidence at the time, upheld the Tribunal’s decision in June 2016, but ordered the parties to provide all related documents to the Commission for investigation and for it to report its findings to the Tribunal.
During the investigation, a dispute arose over the Commission’s subpoena powers. In September 2018, the Constitutional Court confirmed the Commission’s right to use its full investigative powers. The Commission considered the documents submitted by MultiChoice and the SABC and interrogated the SABC and MultiChoice’s witnesses. The Commission completed its investigation and, in November 2018, submitted a report to the Tribunal concluding that the agreement enabled MultiChoice to influence the strategic direction of the SABC, thus constituting a notifiable merger.
The Tribunal then requested a supplementary affidavit from the Commission. This was filed in April 2021 and reaffirmed the Commission’s finding of a notifiable merger. In response, MultiChoice brought an exception application requesting the Tribunal to:
declare that the facts presented by the Commission and the applicants do not constitute a merger under section 12(2)(g) of the Act; and
dismiss the main application on that basis.
Following a hearing, the Tribunal has dismissed MultiChoice’s exception application.
The Tribunal found as follows: “We are not satisfied that on all possible readings of the facts as set out in the Commission’s affidavits, its Report, and the affidavits of Caxton, Media Monitoring and S.O.S, that no cause of action has been made out that the conclusion of the Agreement gave Multichoice the power to influence the policy of SABC, which if established, would constitute a merger in terms section 12(2)(g) of the Act”.
The central issue, whether the conclusion of the agreement gave rise to a merger in terms of section 12(2)(g) of the Act, which should be viewed in a wide sense (as per the CAC’s guidance in its judgment), raises complex issues of both fact and law and ultimately potentially affects competition in the relevant markets and millions of South African consumers. The many disputed facts in this matter relating to control in terms of section 12(2)(g) of the Act, in the Tribunal’s view, are not well suited for determination by exception and can only be determined in their proper context through the hearing of oral evidence.
The Tribunal noted that it must be in the public interest for transactions involving the public broadcaster to be examined with particular consideration of the purpose of the Act. The Tribunal also noted that it would be inappropriate to grant the exception application as it would depart from the CAC order, read in the context of the CAC judgment, as well as the judgment and order of the Constitutional Court, which ordered the Tribunal to re-hear the matter, employing its inquisitorial powers. In the circumstances, MultiChoice's exception application is dismissed. The main application will proceed to a hearing on its merits in due course.
The Tribunal’s reasons for its decision will be publicly available in due course, once any confidentiality claims by the parties have been assessed and finalised.
