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[2014] ZACT 62
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Dark Fibre Africa (Pty) Ltd v MCT Telecommunications (Pty) Ltd (019554) [2014] ZACT 62 (12 November 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 019554
In the matter
between:
DARK
FIBRE AFRICA (PTY)
LTD
.......................................................................
Primary
Acquiring Firm
And
MCT
TELECOMMUNICATIONS (PTY)
LTD
..........................................................
Primary
Target Firm
Panel : Yasmin
Carrim (Presiding Member)
: Andreas Wessels
(Tribunal Member)
: Prof Fiona
Tregenna (Tribunal Member)
Heard on: 22 October
2014
Order Issued on: 22
October 2014
Reasons Issued on:
12 November 2014
Reasons for
Decision
Approval
[1] On 22 October
2014, the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between Dark Fibre
Africa (Pty)
Ltd (“DFA”) and MCT Telecommunications (Pty) Ltd (“MCT”).
[2] The reasons for
approving the proposed transaction follow.
Parties to
transaction
Primary acquiring
firm
[3] The primary
acquiring is DFA, a firm incorporated in accordance with the company
laws of the Republic of South Africa. DFA is
controlled by Community
Investment Ventures Holdings Ltd (“CIVH”). CIVH is
jointly controlled by New GX En Commandite
Partnership 2 (“New
GX”) and Industrial Electronic Investments (Pty) Ltd.
[4] New GX is
controlled by the Khuno Share Trust. The Khuno Share Trust is for the
benefit of Mr. Khudusela Pitje and the Khuno
Family Trust. Industrial
Electronic Investments (Pty) Ltd is controlled by Remgro Ltd.
[5]
DFA owns “dark fibre” communications infrastructure,
which it operates and maintains. It
inter
alia
leases
out infrastructure elements (such as fibre and ducts) to licenced
operators of telecommunications service providers. The
dark fibre is
used for the transmission of metro and long haul telecommunications
traffic.
Primary target
firm
[6] The primary
target firm is MCT which is a wholly owned subsidiary of CIE
Telecommunications (Pty) Ltd (“CIET”),
which is in turn
wholly owned and controlled by CIVH and therefore falls within the
CIVH Group.
[7] MCT is a
specialist installations contractor of fibre based communications
infrastructure, including maintenance and repairs.
MCT further
provides services referred to as ‘Cable Managed Services’
(“CMS”). These services include:
•
Network
engineering support;
•
Programme
and services management which includes contractor and material
management, installation quality management, budget and
timeline
management;
•
Installation
management; and
•
Maintenance
of optical fibre based communications infrastructure.
Proposed
transaction and rationale
[8] In terms of an
Intra-Group Sale of Shares Agreement, DFA intends to acquire the
entire issued share capital in MCT from CIET.
Pre-merger MCT is
wholly owned by CIET, which in turn is a wholly owned subsidiary of
CIVH. The proposed transaction thus amounts
to an internal
restructuring in terms of which the ownership of MCT will be
transferred from CIET to DFA.
[9] The merging
parties submitted that that the internal restructuring is for
purposes of simplifying the CIVH Group structure.
Impact on
competition
[10] According to
the Commission’s findings the proposed transaction does not
give rise to a horizontal overlap of the merging
parties’
activities. DFA operates as a provider of dark fibre communications
infrastructure whereas MCT operates in the CMS
market.
[11] The Commission
however found there to be a vertical relationship between the merging
parties in respect of services (CMS) offered
by MCT to DFA and other
services offered by subsidiaries within the CIVH, New GX and Remgro
Group. However, this situation existed
pre-merger. The Commission
concluded that the proposed transaction will not result in any
customer or input foreclosure in that
the merging parties will
continue to provide their products and services to other customers
after the proposed merger.
[12] We concur with
the Commission’s competition assessment, i.e. that the proposed
transaction is unlikely to substantially
prevent or lessen
competition in any relevant market.
Public interest
[13]
The merging parties confirmed that the proposed transaction will not
result in an adverse impact on employment.
1
The proposed transaction further raises no other public interest
concerns.
Conclusion
[14] In light of the
above we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in any relevant market In
addition, no public interest issues arise from the proposed
transactions. Accordingly we approve the
proposed transaction
unconditionally.
12 November 2014
DATE
Andreas Wessels
Yasmin Carrim and
Prof Fiona Tregenna concurring
Tribunal Researcher:
Derrick Bowles
For the merging
parties: Janine Simpson and Christopher Kok of Webber Wentzel
For the Commission:
Relebohile Thabane and Grace Mohamed
1
Merger
Record
inter
alia
pages
8 and 64.