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[2014] ZACT 47
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Blue Label Telecoms Ltd v Viamedia (Pty) Ltd (018937) [2014] ZACT 47 (14 August 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 018937
In the
matter between:
Blue
Label Telecoms Ltd
Acquiring Firm
and
Viamedia
(Pty) Ltd
Target Firm
Panel
: Norman
Manoim (Presiding Member),
Yasmin
Carrim (Tribunal Member) and
Imraan
Valodia (Tribunal Member)
Heard
on
:
31 July
2014
Order
issued on :
31 July
2014
Reasons
issued on :
14 August 2014
Reasons
for Decision Approval
Approval
[1]
On 31 July 2014 the Competition Tribunal (“Tribunal”)
unconditionally approved the large merger between Blue Label
Telecoms
Ltd (“BLT”) and Viamedia (Pty) Ltd (“Viamedia”).
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
[3]
The primary acquiring firm is BLT, a company in terms of the laws of
the Republic of South Africa. BLT is a firm listed on the
Johannesburg , Stock Exchange (“JSE”) and is therefore
not controlled by a single entity. BLT is a wireless application
service provider (“WASP”) and distributor of prepaid
products and transactional services. BLT controls various firms
however of relevance to the proposed transaction are the business
operations of Panacea Mobile (Pty) Ltd (“Panacea Mobile”)
and Cellfind (Pty) Ltd (“Cellfind”).
[4]
Panacea Mobile and Cellfind are both active in the market for the
provision of wireless application services. Panacea Mobile
provides
bulk-messaging services and least cost routing services which enable
customers to find the most cost effective route for
sending short
message service (“SMS”). Cellfind on the other hand
provides location based services; value added services
and
aggregation solution messaging services.
[5]
The primary target firm is Viamedia, a firm incorporated in terms of
the laws of the Republic of South Africa. Viamedia is also
active in
the wireless application services market. Viamedia distributes a wide
range of content such as entertainment, games,
news and similar
interactive and communication services. Viamedia provides content to
national consumers through various bearer
channels to mobile phones.
[6]
Wireless application service providers such as Viamedia provide their
services to consumers through mobile platforms. While
their services
are offered to customers through the networks of Mobile Network
Operators (“MNO”), such as Mobile Telephone
Networks
(“MTN”), Vodacom and Cell C, the customer who subscribes
to those particular services (for example games or
price-check
applications) belong to Viamedia and not to the MNOs. The
subscription fees for such services are charged to these
customers by
the MNO on behalf of Viamedia. The MNO then passes this revenue onto
Viamedia after retaining a percentage thereof
as agreed between it
and Viamedia.
Proposed
transaction
[7]
The proposed transaction will result in BLT acquiring 75% of the
issued share capital of Viamedia, thus gaining control of Viamedia
post-merger.
Competition
assessment
[8]
The Competition Commission’s (“Commission”)
assessment revealed a horizontal overlap in the broader market
for
the provision of wireless application services. The Commission
further assessed:
•
Panacea Mobile’s market for the
provision of bulk-messaging services,
•
Cellfind’s market for the
provision of location based services and
•
Viamedia’s market for the
provision of mobile content.
[9]
This assessment revealed that no overlap occurs as the services
offered by the merging parties can never be considered to be
interchangeable or substitutable with each other. This is also
evident in the fact that the customer bases of the merging parties
are different.
[10]
In the broad market for the provision of wireless application
services the merging parties submitted that post-merger they
will
have a market share of less than 16%. The Commission however
submitted that the post-merger market share will also be less
than
12%.
[11]
During the hearing this difference in market shares was attributed to
the fact that the Commission and the merging parties
had relied on
different sources for their computation. Regardless of which market
shares we take into account, the market accretion
is very marginal
and the proposed transaction will not have any negative impact on
competition in the relevant product market.
Public
Interest
[12]
The merging parties confirmed that the proposed transaction will have
no adverse effect on employment and raises no other
public
interest concerns.
CONCLUSION
[13]
We agree with the Commission that the proposed transaction is
unlikely to substantially prevent or lessen competition and thus
approve the transaction without conditions.
14
August 2014
DATE
________________________
Ms
Yasmin Carrim
Prof.
Imraan Valodia and Mr Norman Manoim.
Tribunal
Researcher:
Caroline Sserufusa
For the
merging parties: Justin Balkin of
Edward Nathan Sonnenbergs
For the
Commission:
Lana Norton