The Competition Commission has found that the SABC and MultiChoice implemented a merger transaction without notifying it.
The matter relates to a content-sharing agreement between the SABC and Multichoice in 2013, which was subsequently called into question following investigations that showed that the agreement included clauses that tried to influence the public broadcaster’s position on encryption.
The matter had been dismissed by the Competition Tribunal and Competition Appeal Court two times before, but the Commission said that this was because of the limited evidence presented to the bodies at the time.
In a statement released on Monday (12 November), the Commission said that new investigations – which sought more documents from Multichoice and the SABC – turned up new information indicating that the deal was in fact a merger, not a simple agreement.
The Commission added that the failure by the SABC and Multichoice to notify it of this was in contravention of the Competition Act.
In its report, the Commission found that MultiChoice – through the agreement – influenced the SABC’s position on the encryption of its Free to Air Channel.
It noted that the SABC’s position had switched at different times between supporting set top box control (including encryption) and not supporting set top box control.
“In the agreement, however, the SABC categorically and unequivocally undertook in favour of Multichoice not to encrypt all its channel signals in respect of its Free to Air Channels transmitted on its DTT platform,” it said.
“The Commission found that the encryption of SABC’s Free to Air Channels including set top box control would have, inter alia, enabled the entry of new entrants into the market and that the agreement had the effect of protecting Multichoice’s dominance in the Pay TV market.”
In terms of the Competition Act, the ability of one company to materially influence the policy of another company constitutes a notifiable merger transaction which must first be approved by competition authorities before it is implemented.
The Competition Act requires that such agreements should first be scrutinised by the competition authorities before they are implemented because they could have a significant impact on the competitive process and raise significant public interest issues.
In this case, the SABC and Multichoice failed to seek prior approval of the Commission before implementing the agreement, it said.
The Commission has therefore recommended to the Competition Tribunal that it should call upon the SABC and Multichoice to file the agreement as a merger.
It added to that it plans to initiate proceedings in the Tribunal against the SABC and Multichoice for failing to obtain the necessary approval.