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[2019] ZACT 31
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Competition Commission v Media24 (Pty) Ltd and Another (FTN026May19) [2019] ZACT 31 (10 July 2019)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case
No: FTN026May19
In
the matter between:
The
Competition
Commission
Applicant
And
Media24
(Pty)
Ltd
First Respondent
Novus
Holdings
Ltd
Second Respondent
Panel:
N Manoim (Presiding Member)
Y
Carrim (Tribunal Member)
I
Valodia (Tribunal Member)
Heard
on: 10 July 2019
Decided
on: 10 July 2019
Consent
Agreement
The Tribunal hereby
confirms the consent agreement as agreed to and proposed
by
the Competition Commission and Media24 (Ply) Ltd; Novus Holdings Ltd
annexed hereto marked "A".
______________________
Presiding
Member
Mr
Norman Manoim
10 July 2019
Date
Concurring: Ms Yasmin
Carrim and Prof. lmraan Valodia
1. Definitions
For
the purposes of this Consent Agreement the following definitions
shall apply:
1.1.
"Act"
means the Competition Act, 1998 (Act No. 89 of
1998), as amended;
1.2.
"Commission"
means the Competition Commission of
South Africa, a statutory body established in terms of section 19 of
the Act, with its principal
place of business at Mulayo Building
(Block C), the DTI Campus, 77 Meintjies Street, Sunnyside, Pretoria,
Gauteng;
1.3.
"Commissioner"
means the Commissioner of the
Competition Commission, appointed in terms of section 22 of the Act;
1.4.
"Consent Agreement"
means this agreement duly signed
and concluded between the Commission and the Respondents;
1.5.
"Media24"
means the primary acquiring firm, Media24
Proprietary Limited, private company duly incorporated in accordance
with the company
laws of the Republic of South Africa with its
principal place of business at 40 Heerengracht Cape Town, 8001.
1.6.
"Media24/Novus transaction"
means the acquisition by
Media24 of sole control over Novus which occurred pursuant to the
implementation of the Restated Management
Agreement of Novus on or
about 31 March 2015, as determined by the Novus Judgment subsequent
to the implementation of the Restated
Management Agreement;
1.7.
"Novus"
means Novus Holdings Limited a public
company duly incorporated in accordance with the company laws of the
Republic of South Africa
with its principal place of business at 10
Freedom Way, Milnerton, 7441.
1.8.
"Novus Judgment"
means the judgment and order of the
Competition Appeal Court issued on 25 November 2015 in
Caxton and
CTP Publishers and Printers Limited v Media24 Proprietary Limited and
others
(Case No. 136/CAC/Mar2015);
1.9.
"Parties"
means the Commission and the Respondents,
namely Media24 and Novus;
1.10.
"Restated Management Agreement"
means the management
agreement entered into by Media24 and Novus signed on 23 February
2015;
1.11.
"Respondents"
means Media24 and Novus;
1.12.
"Tribunal"
means the Competition Tribunal of South
Africa, a statutory body established in terms of section 26 of the
Act, with its principal
place of business at Mulayo building (Block
C), the DTI Campus, 77 Meintjies Street, Sunnyside, Pretoria,
Gauteng.
2. Background to the
transaction
2.1.
On 23 February 2015, Media24 and Nevus concluded the Restated
Management Agreement which redefined certain of the powers of
Mr
Lambert Relief, the then Chairman of Nevus. The Restated Management
Agreement was a restatement of the Management Agreement
of 2008,
which conferred certain minority protections and powers on Mr Retief.
The implementation of the Restated Management Agreement
occurred as
part of the process of the listing of Nevus on the Johannesburg
Securities Exchange ("JSE").
2.2.
Prior to implementation of the Restated Management Agreement, the
merging parties' legal representatives engaged the Commission
and
appraised it of their intention to list Nevus and implement the
Restated Management Agreement.
2.3.
Subsequent thereto, and before implementation of the Restated
Management Agreement-
2.3.1. Caxton and CTP
Publishers and Printers Limited ("Caxton") brought an
urgent application to the Tribunal seeking
an order interdicting the
implementation of the Restated Management Agreement, and thus the
listing of Novus on the JSE;
2.3.2. on 23 March 2015,
the Tribunal held that the Restated Management Agreement did not give
rise to a change in control; and
2.3.3. the Restated
Management Agreement and the listing of Novus on the JSE occurred on
or about 31 March 2015.
2.4.
Subsequently, Caxton appealed the decision of the Tribunal to the
Competition Appeal Court ("CAC").
2.5.
On 25 November, the CAC handed down the Novus Judgement and held that
there had been a change of control when Media24 and Novus
implemented
the Restated Management Agreement. The CAC concluded that the 2008
Management Agreement conferred on Mr Relief joint
control over Novus,
while the Restated Management Agreement diminished that control.
2.6.
The effect of the Novus Judgement was that the implementation of the
Restated Management Agreement on 31 March 2015 (which
coincided with
the listing of Novus on the JSE) conferred on Media 24 sole control
over Novus and hence constituted a notifiable
merger in terms of
section 12(2) of the Act.
2.7.
Consequently, the earlier implementation by Media24 and Novus of the
Restated Management Agreement on or about 31 March 2015
without the
approval of the Competition Authorities is a contravention of section
13A(3) of the Act, notwithstanding the Tribunal's
earlier order that
the Restated Management Agreement did not give rise to a change in
control.
2.8.
Pursuant to the Novus Judgement, the Respondents notified the
Media24/Novus transaction to the Commission on 19 February 2016
as a
large merger. Conditions were tendered by Media24 and Novus for
Media24 to divest itself of the ability to control Novus by
reducing
its shareholding in Novus from 66.5% before the merger to 19% after
the merger with no minority protections.
2.9.
On 3 August 2017, the Tribunal approved the merger between Media24
and Novus with conditions.
3. Background to this
settlement
3.1.
The Commission, Media24 and Novus agree to settle the contravention
of section 13A(3) which occurred pursuant to implementation
of the
Restated Management Agreement without a penalty, because Media24 and
Novus implemented the Restated Management Agreement
after -
3.1.1. they had
approached the Commission appraising it of the Media24/Novus
transaction; and
3.1.2. the order of the
Tribunal confirming that such an implementation would not amount.to a
merger.
3.2.
Furthermore, the merger was approved subject to conditions in terms
of which Media24 would divest itself of the ability to
control Novus
by reducing its shareholding from 66.5% to 19%.
4. Admissions
Media24
and Novus admit that, as a consequence of a subsequent ruling by the
CAC, the Media24/Novus transaction constituted a notifiable
large
merger as defined in section 11(5)(c) of the Act and was implemented
in contravention of section 13 A(3) of the Act.
5. Agreement concerning
the Respondent's future conduct
5.1.
The Respondents agree and undertake to notify the Commission of any
future transactions that constitute a notifiable merger
as defined in
section 12(1) of the Act read together with section 11(5) of the Act.
The Respondents furthermore agree and undertake
to refrain from
engaging in prior implementation of notifiable mergers in
contravention of section 13A(3) of the Act.
5.2.
The Respondents also agree and undertake to develop and implement a
competition law compliance programme as part of its corporate
governance policy, which is designed to ensure that its employees,
management, directors and agents do not engage In future
contraventions
of Chapter 3 of the Act. In particular, such
compliance programme will include mechanisms for the identification,
prevention, detection
and monitoring of any contravention of the Act.
5.3.
The Respondents furthermore agree and undertake to submit a copy of
such compliance programme to the Commission within 60 days
of the
date of confirmation of this Consent Agreement as an order by the
Tribunal.
6.
Full and Final Settlement
This
agreement, upon confirmation as an order by the Tribunal, is entered
into in full and final settlement and concludes all proceedings
between the Commission and the Respondents relating to the
contraventions of section 13A(3) of the Act by the Respondents that
were the subject of the Commission's investigation under cases
CC2011Feb5016 and CC2016Feb0055.
Dated
and signed at
Cape Town
on the
26
th
day of
February
2019
For
the First Respondent
____________________
Ishmet
Davidson
(duly
authorised)
CEO
(Insert
Position held)
Dated
and signed at
Cape Town
on the
26
th
day of
February
2019
For
the Second Respondent
_______________________
Neil
Birch
Chief
Executive Officer
Dated
and signed at
Tshwane
on the
6
th
day
of
May
2019
For
the Competition Commission
________________________
Tembinkosi
Bonakele
Competition
Commssioner