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South Africa: Tribunal Upholds Approval of Nail-Primedia Merger
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Business Day (Johannesburg)
COLUMN
12 May 2008
Posted to the web 12 May 2008
Edward West
Johannesburg
A COMPETITION Tribunal review reconfirmed its approval of the merger between New Africa Investments Limited (Nail) and Primedia on Friday.
The merger had been referred back to the tribunal for reconsideration by the Competition Appeal Court after rival radio station company African Media Entertainment (AME) appealed the tribunal's decision on February 7 last year to approve the merger.
The tribunal concluded on Friday that the merger did not lead to Primedia acquiring control of Nail's asset, the Gauteng radio station Kaya FM, either solely or jointly.
The tribunal considered whether the merger would lead to a lessening of competition for radio advertising in Gauteng. "If it cannot control Kaya FM then the merger will not lead to the acquiring firm being able to control the prices of the target firm," it said.
"We find that even if that market is restricted to the narrow number of players that we have defined as constituting the first circle of stations that compete in that market, the merger will not lead to either anticompetitive unilateral or co-ordinated effects."
Primedia had acquired the stake in Gauteng radio station Kaya FM for R19m through the merger with Nail, though AME had offered a higher price.
In 2006 the Competition Commission found the merger would lead to anticompetitive effects, but that these could be remedied by imposing certain conditions. Primedia was unhappy about the conditions and took the matter to the tribunal.
When the tribunal started its hearings, the commission altered its position and opposed the merger.
AME was allowed to intervene in the proceedings.
After the tribunal's decision to approve the merger in February last year, AME approached the Competition Appeal Court, which granted AME the right of a review.
At issue was Primedia's acquisition of a 24,9% stake in Kaya FM through the merger. The rest of Kaya FM is owned by Capricorn Capital Partners.
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Primedia would be able to vote the full 24,9%, but its economic interest in Kaya FM represented about 18,17% of the station's equity.
AME was concerned that Nail's shareholding in Kaya FM was now controlled by a company that owned radio stations in competition to Kaya FM and this could a ffect the Gauteng radio advertising market.
Neither AME nor Primedia were available for comment on Friday.
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