IN THE COMPETITION APPEAL COURT OF SOUTH AFRICA

CASE NO: 259/CAC/Oct24
In the matter between:
CAPITAL NEWSPAPERS (PTY) LTD First Applicant
CAXTON & CTP PUBLISHERS & PRINTERS LTD Second Applicant

And


MEDIA 24 HOLDING LTD First Respondent
NOVUS HOLDINGS LTD Second Respondent
NOVUS PRINT (PTY) LTD Third Respondent

FREE 4 ALL (PTY) LTD Fourth Respondent

INTREPID PRINTERS (PTY) LTD Fifth Respondent

VICTORY TICKET 376 (PTY) LTD Sixth Respondent

MEDIA 24 (PTY) LTD Seventh Respondent

THE COMPETITION COMMISSION Eighth Respondent

THE MINISTER OF TRADE AND INDUSTRY Ninth Respondent

2


JUDGMENT

DAVIS AJA

Introduction

[1] This is an application for an interim interdict brought on an urgent basis pending
the final adjudication of the relief sought in part B of the application. The first applicant,
Capital Newspapers (Pty) Ltd publishes six community newspapers including the
Witness in the Pieterma ritzburg and Midlands area of KwaZulu Natal. The second
applicant, Caxton & CTP Publishers and Printers Limited , a company listed on the
Johannesburg Stock Exchange (JSE) holds 45% of the shares in the first applicant.

[2] The first respondent is Media 24 Holdings Limited and part of the Naspers
Limited media group. Media 24 ’s subsidiary, Media 24 Proprietary Limited (the
seventh respondent) publishes and distributes several print newspapers including
inter alia Beeld, Rapport, Daily Sun, City Press, Soccer Laduma and Kick Off, and
Community News papers circulating in the Western Cape. It prints and distributes
these publications through its Media Supply Chain Division, On the Dot (the target
firm).

[3] The second respondent is Novus Holdings Limited, and its subsidiary , Novus
Print (Pty) Limited is the third respondent. Novus Holdings Limited is controlled by
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Paarl Media Holdings (Pty) Ltd and provides printing services to a range of customers
other than newspapers.

[4] The fourth to sixth respondents are Free 4 All (Pty) Ltd, Intrepid Printers (Pty)
Ltd and Victory Ticket 376 (Pty) Ltd) . They are wholly owned subsidiaries of the
second respondent, collectively referred to as “the acquiring firms”.

[5] On 5 August 2024, Media 24 (Pty) Ltd (the seventh respondent) concluded
three sale of business agreements with (a) Free 4 All (Pty) Ltd (fourth respondent) for
the sale of On the Dot, (b) Intrepid Printers (Pty) Ltd (fifth respondent) for the sale of
some community newspapers, and (c) Victory Ticket 376 (Pty) Ltd (sixth respondent)
for the sale of soccer publications known as Soccer Laduma and Kick Off. In terms of
clause 1.2.30 read with clause 3.1 of these agreements the agreements had a long
stop date; that is the date by which the suspensive conditions were required to be
fulfilled or waived by 31 October 2024. On 30 October 2024, the Commission
approved the intermediate merger subject to certain conditions.

[6] As Part A, of the interim relief, the applicants sought to interdict first to seventh
respondents from taking any steps to implement the proposed merger between third
respondent, fourth respondent and fifth respondent together with Media Supply Chain
Management Division operated by seventh respondent and which is referred to as ‘On
the Dot’. They also seek an order to suspend a decision by the eight h respondent
(Commission) to approve what is referred to in a notice of motion as “the merger”.
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[7] Part B envisages final relief which would seek to set as ide the Commission’s
approval of the merger as being inconsistent with the Constitution and invalid , thus
justifying its being reviewed and set aside on cognizable competition grounds.

The Competition Commission’s Decision

[8] On 6 August 2024 , following the conclusion of the three sale of business
agreements referred to above, the Commission received a notice of the intermediate
merger whereby second respondent through its wholly owned subsidiaries fourth, fifth
and sixth respondents sought to acquire a series of businesses from seventh
respondent, being the medi a distribution and supply chain management business
known as ‘On the Dot’ and a portfolio of twenty community newspapers circulating in
specific geographic areas within the Eastern Cape, Free State, Northern Cape and
Western Cape, together with the national soccer newspapers titles known as Soccer
Laduma and Kick Off which cover local and international soccer news.

[9] In evaluating the merger, the Competition Commission found that competition
concerns may be triggered if the merged entity required its customers to either:
1. Exclusively procure cold set printing services and distribution services
from merged entities; or
2. Procure printing / distribution on condition that the customer also
procures distribution / printing services.
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In addition, the Commission found that there were public interest considerations that
required protection of employees against merger specific retrenchments.

[10] The Commission and the merging parties therefore agreed that for three years
after the merger, the merging entities would offer customers cold set printing and On
the Dot’s distribution services separately, the terms and conditions of which were set
out in an annexure to the ruling of the Competition Commission.

[11] Once these conditions had been accepted the Commission concluded that the
merger was unlikely to result in substantially lessening or preventing of competition in
the relevant market. The Commission was concerned that certain employment issues
were raised and therefore the merging parties tendered certain commitments which
were accepted by the Commission.


[12] Regarding these conditions the merging parties agreed not to retrench any
employees as a result of the merger for a period of three years from the
implementation date. The agreement also provided that for the avoidance of doubt
the merger specific retrenchments did not include:
1. Voluntary retrenchment and/or voluntary separation agreements;
2. Voluntary early retirement packages;
3. Unreasonable refusals to redeploy in accordance with the provisions
of the Labour Relations Act;
4. Resignations or retirements in the ordinary course of business;
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5. Retrenchments lawfully effected for operational requirements
unrelated to the merger; and
6. Terminations in the ordinary course of business including but not
limited to dismissal as a result of misconduct or poor performance.

[13] According to the respondents, once the merger approval was granted on 30
October 2024, the merging parties acted in terms of their contractual commitments to
implement the merger.

[14] When the Commission approved the merger on 30 October 2024 immediate
steps were taken including the fulfillment of the suspensive conditions , and the
acquiring firms paying the purchase price on 31 October 2024 in accordance with
Clause 7 of the respective sale agreements. On 31 October 2024 notices in terms of
s 187 of the Labour Relations Act were issued to the relevant employees. As such, in
accordance with Clause 6 of the sale agreement s, full risk, reward and ownership of
the acquired businesses transferred to the acquiring firms were also assumed together
with the liabilities of the respective businesses. As was claimed by Raj Lalbahadur,
the interim Chief Executive Officer of the seventh responden t in the answering
affidavit, the merger had been fully implemented and it was not competent in law to
interdict the implementation of the merger in circumstances where the merger ha d
already been implemented.


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The essence of the applicant’s case

[15] The applicants contend that the transaction which was notified to the
Commission, and which was visited with approval represents but one component of a
strategic plan adopted by the seventh respondent which also include s the closure of
numerous long standing printed titles such as the City Press, Rapport, Beeld and the
Daily Sun together with a series of what is described as iconic magazines such as
Drum and True Love. Applicants aver that seventh respondent waited until the
decision on 31 October 2024 before it commenced with the implementation of its
overall strategic decision which was to close this series of newspapers and retrench
staff.

[16] The applicants have approached this Court on the basis that the transaction
which was notified to the Commission was merely part of a broader strategic plan, the
implications of which were not considered by the Commission when it made its
decision to approve the merger subject to certain conditions. The applicant contends
that on 12 April 2024 the board of the seventh respondent considered ‘a redesign
proposal’ which included both the closure of what is referred to as the terminating
newspapers (being the titles which would cease being published in print form) and the
divestiture of On the Dot.

[17] On 8 May 2024 first applicant was approached by the CEO of the seventh
respondent, Mr Ishmet Davidson , who informed first applicant that the seventh
respondent was considering a potential sale of On the Dot as part of a broader
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restructuring of its operations. The First applicant (Capital Newspapers) was invited to
purchase On the Dot and he proposed that the Media 24 portfolio of Western Cape
community newspapers and soccer titles be bundled into the transaction. Following
this approach, a series of negotiations took place between Capital Newspapers and
Media 24 over a period of four weeks. According to the first applicant, on 7 June 2024,
it was suddenly informed by Media 24, without any explanation, that Media 24 decided
to end the negotiations with Capital Newspapers and was proposing to sell the relevant
businesses to Novus. There is a dispute on the papers as to whether the reason that
seventh respondent did not sell the terminating newspapers to first applicant was
because the latter insisted on purchasing the terminating newspapers as part of a deal
which seventh respondent did not want to sell. By contrast, the first applicant contends
that it made an offer on 13 June 2024 for On the Dot business and community
newspapers alone.

[18] Applicants have placed great emphasis on a presentation entitled ‘Planned
Closure and Divestments’ which was made to the seventh respondent on 5 August
2024. This presentation expressly and directly referred to “the plan” which showed
that:
1. The closure of terminating newspapers;
2. The transition of these titles to digital; and
3. The sale of On The Dot and community newspapers
were inextricably linked steps in a composite process.

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[19] Focusing on the closure of the terminating newspapers the applicants contend
that this would have two direct and drastic consequences being:
1. Severe employment consequences for the printed newspaper industry;
and
2. Significant increases in the per unit costs of distribution of On the Dot
which is an essential distributor of the remaining major “paid for”
newspaper titles in South Africa , including the Sowetan, the Sunday
Times, the Citizen, the Witness, the Daily Maverick and the Mail and
Guardian.

[20] According to the applicants the net effect of the respondents’ plan would be that
On the Dot will lo se approximately 60% of its volumes and a considerably higher
percentage of revenues. Accordingly , it would have to significantly increase its
distribution costs to rival newspaper publishers which are dependent on On the Dot
for the cost-effective distribution of the newspapers. In turn , these increases will
compromise the survival of various publishing enterprises in South Africa and harm
both competition and freedom of expression in that it will retard , if not significantly
reduce, the diversity of media coverage for the public.

[21] In essence therefore the applicants case is that the Commission made a
decision to approve a transaction which approval constituted a fundamental
reviewable misdirection in that it had failed to properly assess both the competition
and public interest implications of the notified transaction as a composite strategy and
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hence failed to apply the broader merger decision making process as required in terms
of the Competition Act 89 of 1998 (‘the Act’).

[22] Applicants also referred to a series of affidavits deposed to by Mr Hoosain
Karjieker on behalf of the Mail and Guardian and by Ms Susan White on behalf of the
Daily Maverick. These align with the same claim , namely that they share concerns
about the proposed merger and that they concur with Mr Jacobs’ assessment that the
Competition Commission failed to perform an investigation of the proposed merger
which included the composite plain. B eyond these bald assertions, these affidavits
add nothing to the evidence provided by applicants.

[23] The other material evidence provided by the applicants was that in the early
hours of 31 October 2024 employees of seventh respondent were informed that the
latter was implementing the transaction that day and that ‘the decision by the
Commission to pave the way for Media 24 to take the necessary steps are a strategic
journey to establish and cement a viable and sustainable model for independent digital
journalism in line with irreversible consumer trends and preferences .’ It also stated
that the final publication date for the Beeld, City Press, Daily Sun, Rapport would be
31 December 2024.

[24] On the basis of all this evidence the applicants maintain that it is clear that:
‘(1) The notified transaction (the sale of On the Dot and other assets…) form an
integral part of a broader strategic plan and decision-making process by Media
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24 that involved the closure of the Terminating Newspapers and the migration
of their readers to Media 24’s digital platform;
(2) The closure of the terminating newspapers and the negative consequences
thereof for employment and the costs structure of On the Dot was dependent
on the approval of the notified transaction by the Commission. The words of
Media 24 itself the approval “paved the way” for the closure of the terminating
newspapers and entrenchment of employees.’

The applicant’s constitutional argument

[25] Applicants case focused upon the reasoning adopted by the Commission in
respect of the impact of what it referred to as the strategic plan on entrenched
constitutional rights; in particular where the Commission stated:
‘The merger transaction in this case therefore involved a garden variety competition
and public interest analysis which did not animate any lofty constitutional principles.’

[26] According to Mr Marcus who appeared together with Mr Wilson , Ms Pudifin-
Jones, Ms Maharaj –Pillay and Mr Sive on behalf of the applicants, this approach was
fundamentally wrong in that it fl ew in the face of the clear judgment of the
Constitutional Court in Competition Commission of South Africa v Mediclinic South
Africa (Pty) Ltd and another 2022 (4) SA 323 (CC). In his view , this judgment had
established two fundamental principles within the context of merger proceedings
being that:
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1. regard must be had to the requirements of s 39 (2) of the Constitution which
requires that the interpretation of all legislation promote the spirit , purport
and objects of the Bill of Rights; and
2. regard must be had to the obligation under s 7 (2) of the Constitution to
respect, promote and fulfil the rights in Chapter 2 of the Constitution (the
Bill of Rights).

[27] A central basis of this argument was located at para 55 of the Constitutional
Court’s judgment in Mediclinic in which in overturning the decision of the majority of
the Competition Appeal Court Moegeng CJ said:
‘In its interpretation of section 12 A (1) (a) and (2) of the Act, the majority overlooked
sections 7 (2) and 39 (2) of the Constitution , thus failing to adopt the correct
interpretative approach to statutes as set out in this Court’s judgments. Its approach
fails to advance the purpose of the Act and to promote the spirit, purport and object of
s 27 of the Constitution.’

[28] The majority judgement of the Constitutional Court in Mediclinic provides, in
the view of Mr Marcus, the link between freedom of expression as enshrined in s 16
of the Constitution and the facts of the present dispute and thus the Commission’s
incorrect approval of the merger. It is therefore necessary in assessing the
constitutional argument of the applicants to analyze the Mediclinic judgment.

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[29] Briefly stated, Mediclinic involved a merger in terms of which Mediclinic
intended acquiring a controlling share in Matlosana Medical Health Services (Pty) Ltd
which owns two multi-disciplinary hospitals in Klerksdorp.

[30] The Competition Tribunal found that the proposed merger would have held a
significant effect on the healthcare costs of both insured and uninsured patients living
in the rural Potchefstroom / Klerksdorp region. In its view, it would lead to an adverse
public interest effect with no countervailing positive public interest grounds and
accordingly the Tribunal prohibited the merger. On appeal to the Competition Appeal
Court these findings were reversed.

[31] In overruling the Competition Appeal Court’s decision to permit the merger the
majority of the Constitutional Court confirmed the importance of the Constitution in the
interpretive exercise required of the Competition Appeal Court . The key paragraph
employed by Mogoeng CJ at para 72 is instructive:
‘That approach to this interpretive exercise gives context to how the Tribunal and the
Competition Appeal Court should have practically embraced their obligation to promote
the spirit, purport and objects of the right to have access to health care services. In
doing so, the pre -existing difficulty to enter that market, and the high and ever rising
tariffs consumers of medical services already have to contend with in the private
sector, would necessarily have had to be factored into that process.’

[32] The Chief Justice then went on to apply this dictum to the proposed merger
stating:
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‘Mediclinic’s predicted post-merger tariff hike, in this country of huge inequalities and
in this distressed economy, would not have been understood and treated as
insignificant or minuscule as the Appeal C ourt seems to have perceived it. To a
wealthy South African, the percentage by which tariffs would go up after the merger is
understandably negligible and inconsequential. But not so to an average South African
who is not even a member of any medical scheme, not that members of medical
schemes necessarily find these high tariffs any easier to live with. Maintaining or
increasing the scope for choice of essential and much-needed services with particular
regard to the plight of financially under-resourced or the vulnerable, should always be
at the back of the decision-makers’ minds when dealing with mergers. This is, after
all, one of the key demands of the Preamble and purpose of the Act.’ (para 73)

[33] In short, the approach which was adopted by the Constitutional Court in
Mediclinic to s 39 (2) was directly coupled to the facts of the dispute . The Court’s
approach was that in the case of a merger which was to have significant effects on the
medical costs, particularly of the poorer sections of South African community , it was
imperative that the merger should be analyzed through the prism of s 27 of the
Constitution.

[34] The importance thus of Mediclinic to the present dispute is inextricably linked
to whether a merger has taken place in the present case; that is a merger which not
only encompasses the sale of On the Dot and 20 community newspapers but involves
a composite plan which encompassed both the sale of On the DOT and the community
newspapers and the decision to close down a series of printed titles and only publish
them in digital form. In short, the question is whether this significant component of
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the factual matrix of this case constitutes the merger which the Commission was
obliged to consider in terms of s12 read together with s12A of the Competition Act. If
applicant’s contention is correct then manifestly, on the basis of the majority decision
of the Constitutional Court in Mediclinic, recourse would have to be made to s 16 of
the Constitution and hence view the merger through the prism thereof in the same
fashion as did the Constitutional Court majority in Mediclinic.1

The implications of the Mediclinic judgment

[35] Before dealing with the primary question that is, whether this Court is
confronted with a merger as described by applicants , it is instructive to pause to
provide some interpretive guidance as to the implications of the Mediclinic judgment
for competition jurisprudence.

[36] Mogoeng CJ suggests that s 27 of the Constitution was implicated in the
Mediclinic merger in three separate ways. The first is the most obvious namely that
the merger took place in the healthcare sector , albeit that in her minority judgement
Theron J correctly observes that: ‘ This in itself does not mean that our jurisdiction is
engaged.’ (para 100)


1 The minority judgment of Theron J in Mediclinic is instructive to this extent that on the facts as the minority
analysed then, there had been no trenching upon s 27 rights. In short, the minority emphasises the importance
of the prior factual determination as to the nature of the merger being considered by the Competition
adjudicator.
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[37] The second way in s 27 might be implicated is through a s 12A(3) analysis. This
entails an examination as to whether s 27 rights are adversely affected because the
merger will increase concentration in the relevant healthcare and increase prices. The
third possibility is that s 27 would impact Mediclinic by way of the interpretation of s
12A(1) of the Act.

[38] Section 12A(1) requires the Competition Commission or Competition Tribunal
to initially determine whether or not the merger is likely to substantially prevent or
lessen competition. Section 12A(2) provides a series of guidelines to the Commission
or the Tribunal in the determination of whether or not the merger is likely to
substantially to prevent or l essen competition. The practical effect of s 27 of the
Constitution in this regard must be carefully examined If the prices in the case of
medical services increase that would clearly trigger a cognizable concern that the
merger substantially prevents or lessens competition. There would be no need for s
27 to come into play. The role of the constitutional right must mean that if the merger
would have no overall significant effect on the vast majority of consumers of healthcare
in the relevant market but that it would effect a segment of that market , being those
who are financially under resourced or vulnerable, the overall inquiry into substantially
lessening or preventing of competition must take account thereof and interpret th e
phrase through the prism of s 27. 2 That in itself is a factual enquiry.


2 Viewed in this way the enquiry entails a variation of the Kaldor –Hicks definition of efficiency in that in this
case the result does not provide for the possibility of the poorer consumers being recompensed.
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[39] What cannot be the case is that s 27 becomes a self -standing competition
issue. After all there is no basis to conclude that there is a direct application of s 27
to a competition dispute . Rather the Mediclinic judgment itself points clearly to an
indirect application through the interpretive prism of s 39(2) of the Constitution in an
enquiry that is necessitated to determine whether a constituent part of the market who
are the most vulnerable and under resourced will be detrimentally affected by the
merger. If so s 12A(1) may be invoked in circumstances where otherwise, if the
product or service did not trench upon a constitutionally entrenched right , a different
result might apply.
It must be emphasized that in Mediclinic the court was confronted with a merger as
defined in s12. Viewed in this context the implications of the Mediclinic judgement are
uncontroversial in this case in that there is a vital prior question to be determined: is
there a merger of the kind contended for by the applicants.

The merger question

[40] Ms Hofmeyr who appeared together with Mr Mbikiwa and Mr Quinn for
respondents, submitted that it was important to contextualize the enquiry as to whether
this case entailed a merger as advocated by the applicants. As she noted , the
evidence between 2014 and 2023 showed a drastic and irreversible decline in the sale
of print newspapers. For example, in 2014 the average print circulation of City Press
was slightly less than 120 000; it is now less than 12 000. The average print circulation
of Beeld in 2014 was almost 62 000 and a decade later it is approximately 10 000. In
2014 the average print circulation of Rapport was more than 176 000 and a decade
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later it has plunged to 37 000. Not only has this radical decline affected readership
but it has drastically reduced advertising revenue.

.

[41] The seventh respondent’s analysis of the present and future projections
indicated losses of the following order:

.

[42] The dynamic developments of the market for public media call into play the
argument of Joseph Schumpeter (“Capitalism, Socialism and Democracy” (1942) at
84 – 85):
‘What counts is competition from the new commodity, the new technology, the new
source of supply, the new type or organization – competition which commands a
decisive cost or quality advantage and which strikes not at th e margins of the profits
and the outputs of existing firms but at their foundations and their very lives.’

[43] There is considerable authority which can be derived from a dynamic
competition perspective and which accepts that innovation promotes competition and
shapes market structures.3 Almost two decades ago a similar insight was set out by

3 See for example David J Teece “The Dynamic Competition Paradigm: Insights and Implications” 2023(1)
Columbia Business Law Review 374

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the Competition Tribunal in Pharmaceutical Wholesalers v Glaxo Welcome [2003]
ZACT 37 at para 44:
‘We have found it necessary to elaborate these seemingly self-evident truths because,
whether blinded by self-interest or hubris, they are not sufficiently appreciated by the
applicants in this matter. They appear to have forgotten that great markets – and with
them great products and services – have disappeared before and will do so again.
Great companies ha ve frequently been victims of this, the competitive process. Still
greater companies, spurred by the competitive process, have repositioned themselves
– they have found new value -adding services to offer their customers, they have
developed new products, and, at times, they have entered new markets.’

[44] Understandably at a Media 24 Board meeting of 12 April 2024 the following
appears:
‘Given the catastrophic FY 24 performance of newspapers, closure has become
inevitable and urgent action is needed. Management should present a definite plan
for the closure of these publications by no later than June 2024.’

[45] It was this insight, which as Ms Hofmeyr noted, prompted seventh respondent
to seek the route of opting for migration of these printed titles rather than their
discontinuation. The applicants agreed that there was brand value in these printed
titles. Manifestly, once the decision to migrate had been taken, On the Dot, which was
effectively a printed distribution business , was no longer central to seventh
respondent’s business strategy. The impact of the almost catastrophic decline in
readership of print media was reflected in the radical decline in the profits on On the
Dot and its modest EBITDA for the 2024 financial year.
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[46] With this background in mind, Ms Hofmeyr submitted that seventh respondent
sought to sell both On the Dot and community newspapers . She conceded that
negotiations took place between seventh respondent and first applicant at the same
time that similar negotiations were taking place between seventh respondent and
second respondent. Her argument was that the negotiations with the first applicant
did not succeed because the latter was only interested in a deal if it included the sale
of the migrating titles. It must be noted however, that applicants have opposed this
particular version claiming that first applicant had made an offer for the purchase of
On the Dot and the community newspapers unconnected to the acquisition of the
migrating titles.

[47] It is to the papers filed by the parties to which this Court must thus turn. There
can be no question that, in the founding affidavit, Mr Jacobs on behalf of first applicant
made it clear that first applicant was invited ‘to purchase the On the Dot business from
Media 24 and as sweetener / inducement recorded that the Media 24 Western Cape
community newspaper titles were bundled into the same proposed transaction. The
sweetener / inducement was necessary because it was explained to me that numerous
titles that Media 24 currently distributed would be closed by Media 24 and therefore
no longer require On the Dot distribution services.’

[48] In the same affidavit Mr Jacobs did note:
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‘Caxton also supported my off er to acquire the Media 24 newspaper titles and my
attempts to assist Media 24 to ensure the survival of these titles.’

[49] In the answering affidavit Mr Raj Lalbahadur states that Mr Jacobs:
‘fails to identify the central reason for the misalignment between the parties:
Capital/Caxton was originally only interested in acquiring On the Dot if Media 24 were
to retain the newspapers in print. Thereafter, it made a pitch to acquire the titles that
Media 24 had already decided to migrate, namely Beeld, Rapport, Sun and City Press.
But these titles were not for sale because Media 24 had decided to retain the titles and
to migrate from print to digital.’

[50] Mr Roets, in a replying affidavit on behalf of the first applicant 4, claims that Mr
Jacobs had certainly made it clear in the founding affidavit that first applicant explored
ways in which it could ‘ensure that the newspapers could continue to be printed ’ and
that ‘the majority of the newspaper titles that were earmarked for closure could be
saved.’ By contrast, the seventh respondent adopted the view that it did not want to
sell the printed titles as such but rather wish ed to migrate them to a digital media in
that the titles themselves had considerable brand value which could be exploited
through the digital medi um. This claim is supported by a letter from applicants’
attorneys to the Competition Commission on 24 June 2024 in which they make it clear
that the ‘initial and subsequent proposals made by Capital Newspapers could
potentially avoid the cessation of printing of the newspaper titles. The seventh

4 Mr Roets is an attorney acting on behalf the applicants
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respondent did not want to sell the newspapers in that the titles had value which it
intended to employ but now in the digital format.


A return to the core question: what was the merger as defined in the Act

[51] Given this context it is now possible to turn to the fundamental question as to
whether the merger included the elements alleged by applicants, namely the allegation
that seventh respondent’s strategic plan which included the cessation of the
terminating newspapers in print form and their transition to digital form constituted part
of the merger which should have thus been considered by the Commission.

[52] The applicants urged this Court to take a broader approach to merger control
and to construe s 12 to ensure that there was an examination of ‘the widest possible
range of potential merger transitions (in order) to examine whether competition was
impaired. See Bulmer SA (Pty) Ltd and another v Distillers Corporation (SA) Ltd [2001
- 2002] CPLR 36 (CAC) at para 24. In order to evaluate this argument, it is necessary
to turn to s 12 (1) (a) of the Act which provides:
‘For the purposes of this Act a merger occurs when one or more firms directly or
indirectly acquire or establish direct or indirect control over the whole or part of the
business of another firm.”

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[53] Section 12 (1) (b) provides that a merger can be achieved in any manner
including through purchase or lease of the shares, an interest or assets of the other
firm or by way of an amalgamation or combination with the other firm in question. This
provision must be read together with s 12 (2) which defines the term ’ control ‘and
provides a range of ways in which control may be acquired.

[54] Without traversing the comprehensive jurisprudence which has been built up
in respect of these sections, it suffices to say that a merger must always involve one
firm acquiring control over a part or the whole of the business of another firm. No
acquisition or control, no merger. As the Commission noted:
‘The merger before the Commission contemplates the Novus Group acquiring sole
control over the target firms from Media 24. It bears emphasis that the target firms
constitute OTD, Soccer Laduma, Kick Off and the Community Newspapers. The
merger does not include the Media 24 Publications or the termination of the printed
version of the Media 24 Publications.’

[55] So, the question therefore arises as to how the applicants sought to deal with
this particular requirement.

[56] Mr Wilson emphasize d what he referred to as the blinkered approach
contended for by the merging parties who had failed to question whether events that
had taken place even before the notified mergers constituted part of the broad merger
decision making process which would accordingly be sufficiently closely related to the
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merger as notified to the Commission to warrant investigation. In essence, Mr Wilson
contended that the Commission had failed to analyze the transaction whereby the
closure of the print form of the terminating newspapers and the sale of On the Dot
formed part of a single decision-making process.

Evaluation of this argument

[57] This argument is based both on a legal and factual basis. The legal arguments
advanced by Mr Wilson were predicated effectively on two cases, being Goldfields
Limited v Harmony Gold Mining Company Limited (2005) 1 CPLR 74 (CAC) and
Minister of Economic Development and others v Competition Tribunal and others ,
South African Commercial, Catering and Allied Workers Union ( SACCAWU) v
Walmart Stores Inc and another [2012] ZACAC 2.

[58] Goldfields concerned an application in which an order was sought to prevent
the first respondent from implementing a merger. Briefly, first respondent offered to
acquire up to 34.9 % of the share capital in appellant. It stated that it would not acquire
any further shares at the stage of this acquisition and that, if more share s were
tendered, a pro rating mechanism would be used to scale back the shares to this
number. Upon the closure of acceptance of the early settl ement offer a subsequent
offer would commence the day after the consideration was settled in respect of the
early settlement offer.
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[59] The crisp question before the Tribunal was whether the acquisition of 34.9% of
the shares of appellant constituted the acquisition of control which would trigger a
merger enquiry. The Tribunal held that it had not been established that the se two
offers formed part of a single offer to acquire control which decision prompted an
appeal to this Court. The critical question as defined by this Court was different, being
whether there was a proposal to implement a transaction that , when implemented,
would involve the acquisition of control by first respondent either on its own or with
another party over the whole or part of the business of appellant. Critical to th is
evaluation of this case was an undertaking given by a 20% shareholder to support the
conduct of the first respondent, now the holder of 34.9% of the shares in the target
company. Thus, the acquisition of 34.9 % by the first respondent together with an
irrevocable undertaking by the holder of 20% of the shares constituted an assumption
of control in terms of s 12 of the Act.

[60] This is an entirely different situation to that which confronts this Court. In
Goldfields the court had to determine whether the acquisition of a significant parcel of
shares which did not give it control coupled with an irrevocable undertaking by another
shareholder to cooperate with the acquirer sufficed to bring the entire transaction
within the definition of merger. In this case there is no change of control in relation to
the terminating newspapers. They remain under the total control of the seventh
respondent both before and after the notified transaction took place insofar as On the
Dot and Community Newspapers are concerned.

26

[61] Similarly in Walmar t the question was whether certain retrenchments which
took place prior to the notified transaction consummated form ed part of the merger
decision making process. In Walmart the question arose as to the retrenchment of
574 employees of the target company, being Massmart. To this the Court at para 140
said:
‘An examination of the reasoning does not automatically support the argument that,
because the retrenchment took place prior to the merger, it cannot be merger specific,
a conclusion which was central to its finding in the present case. A retrenchment,
which takes place shortly before the merger is consummated may raise questions as
to whether this decision forms part of the broad merger decision making process and
would accordingly be sufficiently closely related thereto.’

[62] In Walmart it was clear that the 574 retrenchments were designed in part ‘to
maneuver the business into a situation’ where it would be attractive to Walmart to
acquire.

[63] The only way in which Walmart could be applicable to the present dispute is if
the evidence justified a similar conclusion . By contrast, citing cases as support for a
submission where the factual matrix is palpably different is unhelpful.

[64] To the extent that there is any doubt about th e fact that the jurisprudence
employed by counsel for the applicants is inapplicable to the present dispute,
reference can be made to the Constitutional Court in Coca Cola Beverages Africa (Pty)
27

Ltd v Competition Commission and another [2024] ZACC 3 which engaged with this
very question of causation. The Constitutional Court was required to ask whether but
for the merger , would a particular event have occurred . If the answer was in the
affirmative, then the Court was required to ask whether the merger was an
approximate or dominant cause of that event. See Coca Cola at paras 58-61 or as
Dodson AJ stated at para 68 : ‘Textually, the exclusion in condition 9.4.5 from the
prohibition on retrenchments of those that are not “merger-specific” points to the need
to link the retrenchments directly, or at least predominantly, to the merger for there to
be a breach:‘ In short, the enquiry in the case of Coca Cola concerned the true reason
for retrenchments; in the instant case it was the decision to migrate from print to
digital.5

[65] In essence therefore , the applicant’s case must stand or fall on the
interconnectedness of the migration decision and the transaction to sell On the Dot
and 20 Community Newspapers which was the subject of merger approval by the
Commission.

[66] Much of th is case is based on statements that seventh respondent made
regarding the migration; in particular the kind of statement made by Mr Davidson on
12 July 2024 in a newspaper article published on the News 24 website that the sale of

5 Mr Marcus sought to apply the seminal minority judgement of Schreiner JA in Collins v Minister of the Interior
and Another 1957 (1) SA 552 (A) at 574 to the effect that the proper approach is that “the parts of a scheme
take their character from the whole” There can be no disagreement with this dictum which after all is a
variation of the substance over form doctrine which was referred to with approval in Harmony v Goldfields .But
as with the balance of the applicants case the question ari ses as to the factual basis for the existence of what
can be termed the composite merger.
28

On the Dot was a “direct consequence” of the intention of seventh respondent to close
the terminating newspapers and for this reason ‘Media 24 required regulatory
certainty on whether it can sell the logistics business before ending the printing of the
papers’.

[67] In his answering affidavit , Mr Lalbahadur emphasized that these statements
were linked to the timing of the migration rather than being part of an overall merger.
Thus,
‘when I sent the email to Media 24 staff on the morning of 31 October 2024 notifying
them of the merger approval when I said that the approval “paved the way” for Media
24 to take the next steps in implementing the original migration decision I was updating
the business about the timing of the decision and the migration of the printed titles .
The need to update the business about this timing were raised because of the manner
in which the applicants had been dealing with Media 24 even before our notification of
the merger in this case.’

[68] This passage from the answering affidavit is designed to answer a series of
letters generated by applicant’s attorneys. For example, on 3 July 2024 applicants’
attorneys wrote to Mr Davidson referring to the announcement of the sale of On the
Dot and various community newspapers and describing this transaction as forming ‘a
composite part of and is inextricably linked to Media 24 ’s announced restructuring of
its newspaper publishing business (which also entails a discontinuation of a number
of titles and its ceasing to print certain other titles) ’. A demand was thus made by
applicant’s attorneys that seventh respondent ’s “composite transaction” must be
29

notified to the Commission as a merger and that no further steps would be taken to
implement any aspects of a composite merger until the composite transaction was
approved.

[69] A barrage of further letters followed including one on 7 July 2024 in which
applicants’ attorneys made it clear that if the undertaking sought would not be given
an application would be launched which would include the summonsing of Mr Koos
Becker to testify in order to compel the competition authorities to deal with ‘the
composite transaction.’ As a result of this aggressive response by applicants ’
attorneys, the seventh respondent ‘decided to give an undertaking not to implement
any retrenchments nor to migrate the print titles until after the completion approval
process was committed’. Nonetheless in letters of 9 and 10 July 2024 the seventh
respondent made it clear that these undertakings did not entail acceptance of the
applicants’ characterization of the proposed transaction. In short, as Mr Lalbahaudur
stated:
‘We gave the undertakings… not because we accepted the characterization of the
transaction but to avoid having to fight urgent proceedings about a notification that had
not yet even been placed before the Commission. We therefore decided to give an
undertaking not to proceed with the implementation of the migration or the associate
retrenchments until the competition investigation process was completed.’

[70] It was only after the Commission had approved the merger on 30 October 2024
that seventh respondent decided that the migration steps could now be implemented.
30

In short, rather than engage in litigation threats, an undertaking was given motivated
solely by the need to obviate legal proceedings.

[71] This approach of the seventh respondents accords with the series of answers
which it had previously provided to the Competition Commission. Thus, to the question
concerning the restructuring and possible demise of a number of newspaper titles the
answer by the seventh respondent was ‘the closures will be implemented regardless
of whether the merger takes place. These will still be available digitally (except Beeld)’.
To the question regarding the allegation that the restructuring and the proposed
transaction would have a significant impact on the media sector the answer which was
provided was that ‘the closures will be implemented regardless of whether the merger
takes. In other words, the plans for the newspapers described above and the impacted
disassociation of their editions are not contingent on the merger. However digital
versions of these newspapers will remain available (except Beeld) and Media 24 plans
to retain all sixty-six journalists from the newspaper by integrating them into Netwerk
24, News 24 and the Daily Sun website’.

[72] The applicants insisted that the decision to sell On the Dot was inextricably
linked to the next step: the migration of a number of newspapers from print to digital.
The evidence, read as a whole, indicates that the applicants have conflated a timing
question, with their argument concerning a composite plan .In other words there is a
clear distinction to be drawn between the sale which took place before the migration,
and a composite plan in terms of which the sale of On the Dot was but a first step in
the composite plan which could arguably be classified as the merger.
31


Conclusion in respect of the composite transaction
[73] The key to the disposition of this case depends on the evidence made
available to this Court. The consistent theme of the evidence provided by seventh
respondent regarding the migration decision reflects the dynamic characteristics of a
media market in which the vast majority of those who are consumers in that market
have shifted their allegiances from print to digital.

[74] To the extent that there remains a market for the print media and in particular
with reference to the possible jeopardy to the poorer segment of the consumer market
which does not have access to digital, there are two responses. In the first place no
evidence was provided in this regard by the applicants. Secondly, there was evidence
placed before this court by the respondents to the effect that access to information by
way of the digital mechanism is far cheaper than the costs of purchasing newspapers.
It may well be that the declining print market is inhabited by poorer consumers. But it
may also be that much of the print circulation can be accounted for by free distribution
of newspapers at hotels and airports, being far more likely to be inhabited by more
affluent sections of the community. The sharp point is that no evidence was placed
before this court to the effect on the media market of the migration to digital and which
consumers would be directly affected thereby.

[75] The applicants warn that the increased cost of distribution of print media as a
result of the sale of On the Dot and the radically reduced print media as a result of the
migration of titles from print to digital will cause the closure of print newspapers. That
32

the cost of distribution may be increased is one factor, that it would result in closure is
another question to which only bald statements are forthcoming from applicants.

[76] In the final analysis it is the dynamic character of the market which has created
the impetus for the migration decision and hence the continuing decline of print media
requiring distribution. The decision to migrate which does not entail a change of control
would not have necessitated a different form of authorization by the Commission, nor
on the evidence can it be suggested that there was a composite transaction that would
have necessitated a different form of authorization by the Commission.

[77] It is not necessary in the light of this finding to engage with the compelling
argument raised by Ms Hofmeyr of the changing manner in which the applicants
sought to characterize the transaction in response to the jurisprudential shoe pinching
at various stages of this litigation.

[78] In addition, it is clear on the basis of the cases cited that there is not a
sufficiently closely related link between the migration and the sale of On the Dot and
the community newspapers to justify any of the variations of the theme of a composite
transaction proposed by the applicants. Once, as this court has found , that the
migration decision must be considered to be a separate commercial decision taken by
seventh respondent, the competition authorities merger jurisdiction is not triggered in
this case. There was thus no merger to review outside of that which concerned On
the Dot and Community Newspapers, there is simply no basis by which to grant interim
33

relief for there is no other transaction which falls within the jurisdiction of the
Competition Commission. Simply put, the separate migration decision does not fall
within the definition of merger and therefore within the jurisdiction of the Commission.
On the basis of this finding , there is no reason to traverse the extensive arguments
made about freedom of expression in that this constitutional right would only be
implicated in a case of this nature in the event that there was a merger of the kind as
envisaged in Mediclinic.

The application to adduce further evidence

[79] A week after the conclusion of the hearing, applicants filed an application to
adduce additional evidence that they contended was material to the disposition of this
case. On behalf of applicants Mr Gill stated that:
‘During this meeting, we were informed that On the Dot’s proposed increase in
distribution costs for Caxton’s newspapers for 2025 would be - nearly double the
increase in distribution costs that the applicants had predicted in their founding affidavit.
They also informed us that there would be a 15% reduction in the distribution footprint
of On the Dot. We were also informed that we had to indicate our acceptance of these
terms by 20 December 2024.’

[80] Mr Gill then claimed:

35

[82] Notwithstanding an attempt to justify the contents of the initial affidavit in a reply
from applicants’ attorney Mr Roets, the nature of the contents of the initial unqualified
claim of a increase is disturbing.

[83] Be that as it may, on the basis of the finding of this Court that no merger as
advanced by applicants had taken place the additional evidence is not relevant to this
finding and thus stands to be dismissed.

[84] For all of these reasons therefore the application is dismissed with costs
including the costs of two counsel.



________________________
DAVIS AJA
Judge of Appeal
NUKU JA and SIWENDU AJA concurred

APPEARANCES
For the appellant: Gilbert Marcus SC, Jerome Wilson SC,
Sarah Pudifin-Jones, Pranisha Maharaj-Pillay and Daniel

36

Sive
Instructed by: Nortons Inc
For the 1st to 7th respondents: Kate Hofmeyr SC, Michael Mbikiwa and Shannon
Quinn
Instructed by: Edward Nathan Sonnenbergs

Date of hearing: 5 December 2024
Date of judgment: 24 December 2024