COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 70/LM/Nov10
In the matter between:
Media24 Limited Acquiring Firm
And
New Media Publishing (Pty) Ltd Target Firm
Panel : Y Carrim (Presiding Member)
A Wessels (Tribunal Member)
M Mokuena (Tribunal Member)
Heard on : 26/01/2011
Order issued on : 26/01/2011
Reasons issued on : 02/03/2011
Reasons for Decision
Approval
1] On 26 January 2011 the Competition Tribunal (“Tribunal”) unconditionally
approved the proposed transaction involving Media24 Limited and New Media
Publishing (Pty) Ltd. The reasons for approval of the proposed transaction
follow below.
Parties to transaction
2] The primary acquiring firm is Media24 Limited (“Media24”). Media24 is
controlled by Media24 Holdings (Pty) Ltd which is in turn controlled by Naspers
Limited (“Naspers”), a multinational media group listed on the Johannesburg
Securities Exchange and the London Stock exchange.
3] Media24 operates as a printer, publisher and distributor of various forms of
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media either solely or through joint ventures with other parties.
4] The primary target firm is New Media Publishing (Pty) Ltd (“NMP”). NMP is
jointly controlled by Media24, which owns 50% of the issued share capital of
NMP, and the following shareholders: Dirkje Johanna van Zyl (16.67%); John
Theodoros Psillos (16.67%); Naomi Herselman (10%); Bridget Ann McCarney
(3%); and the NMP Share Incentive Trust (3.67%). NMP does not control any
other firms.
5] NMP operates mainly as a contract publishing business. It develops and
publishes items such as industry specific publications, in-house publications, e-
newsletters and corporate websites. NMP also publishes its own consumer
magazine titles, namely “ Eat In”; “Eat Out”; “Time Out Visitor’s Guide” , “Time
Out Western Cape Breaks”; and “ Time Out Guide”. These are all annual
publications containing vendor listings and/or travel information. NMP also
provides an events planning and co-ordination service to its clients.
Proposed transaction
6] The proposed transaction essentially results in a move from current joint to post
merger sole control of the target business. As stated in paragraph above,
Media24 pre-merger already holds 50% of the issued share capital of NMP,
and in terms of the Sale of Shares Agreement it intends to acquire an additional
8% of the total issued share capital of NMP from one current shareholder,
Naomi Herselman. 1 Post merger Media24 will hold 58% of the total issued
share capital of NMP and have sole control over NMP.
Rationale for proposed transaction
7] Media24’s rationale for this transaction is the expansion and growth of its
contract publishing business. Naomi Herselman, who is approaching
retirement, is selling 8% of her shares in NMP to partly liquidate her
investment.
COMPETITION ASSESSMENT
Horizontal analysis
8] There is a horizontal overlap between the activities of the merging parties in
8] There is a horizontal overlap between the activities of the merging parties in
1 Naomi Herselman will post merger hold 2% of the shares in NMP.
two areas: (i) the provision of contract publishing services; and (ii) broadly in
the publication of consumer magazines . The Competition Commission
(“Commission”) assessed the transaction on this basis from a supply-side and
national geographic market perspective. However, the precise market
delineation can be left open in this case since our conclusion remains the same
regardless of any alternative approach to market definition.
Provision of contract publishing services
9] In relation to contract publishing for third parties the merging parties will have a
post merger market share of less than 30%. Competitors in this market include
Highbury Safika Monarch, The Publishing Partnership, Quantum, John Brown
Publishing and Uhuru Publishing. Furthermore, the Commission interviewed
customers of the merging parties in this market and they indicated that the
proposed transaction will not have any negative impact on their businesses as
a sufficient number of players will post merger continue to compete with the
merged entity.
Publication of consumer magazines
10] In a broad market for the publication of consumer magazines, the merged entity
will have a post merger market share of less than 40% with a market share
accretion as a result of the proposed deal of less than 1%. Competitors of the
merging parties in this market include Associated Magazines, Avusa, Caxton
and Ramsay Media.
11]According to the merging parties’ submissions there is no horizontal overlap
between their activities in this broad market since NMP’s magazines are highly
differentiated in terms of inter alia periodicity (frequency of publishing), style,
content, price, class of advertiser and target market. The parties submit that
none of the own title magazines published by NMP (see paragraph above) is
reasonably interchangeable with, or a substitute for, any of the magazines
published by Media24. 2 No evidence exists of close competition between the
merging parties in this market.
merging parties in this market.
12] Furthermore, even if one were to separately consider different categories of
magazines published, for example entertainment, home and travel magazines,
there remains a sufficient number of competitors in each of the potential
2 See inter alia page 70 of the record.
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relevant market segments post merger to alleviate likely competition concerns.
13] Lastly, customers raised no concerns in regard to this transaction’s effect on
the market for the publication of consumer magazines.
Vertical analysis
14]There is a vertical relationship between the merging parties since Naspers
supplies both (upstream) printing and (downstream) distribution services to
NMP. NMP also contract publishes a consumer magazine (VISI) on behalf of
Media24, and contract publishes two digital communication publications (ED
and Page) for Media24. In addition NMP contract publishes a number of
custom publications for Multichoice, a subsidiary of Naspers.
15]The Commission found that for all these vertical relationships any type of
foreclosure as a result of the proposed transaction is unlikely – customer
foreclosure is unlikely since Media24 currently supplies NMP with the majority
of its printing and distribution requirements 3 – and input foreclosure is unlikely
given the credible alternative competitors which post merger exist both in the
printing market as well in the contract publishing market. We agree with the
Commission’s conclusion.
PUBLIC INTEREST
16]The merging parties confirmed that there will not be any retrenchments as a
result of the proposed merger. 4 No other public interest issues arise from the
proposed transaction.
CONCLUSION
1] Based on the above we conclude that it is unlikely that the proposed merger
would lead to a substantial prevention or lessening of competition in any
relevant market. Furthermore, no public interest concerns arise from this deal.
Accordingly the proposed transaction is approved unconditionally.
____________________ 02/03/2011
A Wessels DATE
3 Subsidiaries of Media24 render most of the printing services required by NMP, see inter alia page 87 of the record.
4 See inter alia pages 57 and 108 of the record.
Y Carrim and M Mokuena concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Werksmans Attorneys
For the Commission: Thabelo Ravhungoni
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