Daniel Friedman
2 minute read
12 Nov 2018
11:56 am

MultiChoice found to have ‘captured’ SABC through ‘merger’

Daniel Friedman

The Competition Commission of South Africa has found that a 2013 deal amounts to a merger allowing MultiChoice to 'influence' the public broadcaster.

At the time of the deal between Multichoice and SABC, Hlaudi Motsoeneng was the public broadcaster's COO. He reportedly earned R2.87m during 2013. Picture: Tracy Lee Stark

A ruling by the Competition Commission of South Africa has found that Multichoice was able to “influence the strategic direction” of the SABC through a merger transaction.

The commission has issued a statement explaining its finding, in a report, that a 2013 deal amounted to a merger and was in contravention of the Competition Act as it occurred without the commission being notified.

Media group Caxton in 2015 made an application directly to the Competition Tribunal of South Africa challenging the 2013 deal alongside the SOS Support Public Broadcasting Coalition and Media Monitoring Africa.

The five-year agreement gave MultiChoice the right to broadcast SABC’s 24-hour news channel and an entertainment channel, SABC Encore.

It also appears to have led to the SABC abandoning its support of set-top box control. The broadcaster is alleged to have been in favour of introducing set-top boxes only to abandon the idea after the deal was signed.

According to the application, SABC “effectively ceded its power to determine its policy on set-top box control to a commercial broadcasting entity that is also its competitor”.

Caxton, alongside the two other groups, attempted to compel the SABC and MultiChoice to notify the commission of the agreement.

The tribunal dismissed the application and in a 2016 appeal at the Competition Appeal Court (CAC) it was ruled that the deal between the two broadcasting companies was not a merger.

READ MORE: Competition Commission to investigate validity of SABC, MultiChoice deal

But at the same appeal, it was also ruled, as it was a matter of public importance, SABC and Multichoice should provide more documents to the commission.

This eventually led to the Constitutional Court granting the commission the right to investigate the matter again. This time around, the deal was indeed ruled to have been a merger.

The commission has also ruled that the two companies are in violation of the Competition Act as they did not seek regulatory approval for this merger.

Already, several people on Twitter have accused MultiChoice of having “captured” the broadcaster. The DA official account tweeted that MP Phumzile Van Damme had questioned whether the deal could be considered “policy capture”.

SABC spokesperson Neo Momodu, meanwhile said the public broadcaster had since entered into a new commercial channel supply agreement with Multichoice which in its understanding did not constitute a merger.

“The SABC board is reviewing the commission’s recommendations in relation to the encryption part of the 2013 agreement and will respond appropriately in due course,” Momodu said.

“The SABC remains committed to ensuring compliance with applicable competition laws.”

MultiChoice maintains that its 2013 agreement with the SABC was not a merger and says it will challenge the commission’s decision.

(Additional reporting by ANA)

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