Caxton and CTP Publishers and Printers Limited and two others v. Multichoice Proprietary Limited and two others
In this matter, Caxton and CTP Publishers and Printers Limited (“Caxton”), the Media Monitoring Project Benefit Trust (“MMA”) and S.O.S. Support Public Broadcasting Coalition (“SOS”) sought an order from the Competition Appeal Court requiring Multichoice Proprietary Limited (“Multichoice”) and the South African Broadcasting Corporation (SOC) Limited, a state-owned company (the “SABC”) to notify a Commercial and Master Channel Distribution Agreement (the “Agreement”) concluded between the parties in July 2013.
According to the appellants – Caxton, MMA and SOS – the Agreement, in terms of which (inter alia) the SABC agreed to license to Multichoice the content of its programming archives for purposes of creating a new entertainment channel, constituted a ‘merger’ as defined in section 12 of the Competition Act No. 89 of 1998. The respondents, Multichoice and the SABC, denied that the Agreement gave rise to a merger as defined, insisting that the Agreement went no further than a standard content licensing arrangement which would not ordinarily require notification to the competition authorities.
One of the key issues for determination was the question as to whether the grant of an exclusive licence over the SABC programming archives for a period of five years could amount to the transfer of control over a whole or part of the business of the SABC. In other words, did the licensing arrangement give rise to the transfer of assets from the SABC to Multichoice. On the facts of the case, the court did not find that the licensing agreement amounted to a merger, as defined.
The Court also considered the appellants’ allegations that the Agreement granted Multichoice the ability to materially influence the encryption policy of the SABC, being an integral part of SABC’s business. Briefly, it was alleged that by agreeing never to encrypt its broadcast signal (upon threat of a severe financial penalty), the SABC had given Multichoice the right to materially influence a key strategic decision – a right which fell within the contemplation of section 12(2)(g) of the Competition Act. Unable to determine which of the versions put forward by the appellants and the respondents were factually correct, the Court found no reason to depart from the rule that disputes ought to be resolved on the respondents’ version and accordingly could not conclude that the Agreement gave rise to a notifiable merger.
Importantly, however, the Court found that the extraordinary facts of the case required further investigation by the Commission, bearing in mind that the Agreement will have significant consequences on competition within the market for free-to-air broadcasting in South Africa.
Accordingly, the Court ordered Multichoice and the SABC to provide the Commission with copies of all documentation pertaining to the negotiation, conclusion and implementation of the Agreement, whereafter the Commission is required to file a report recommending whether or not the Agreement gives rise to a notifiable change in control.
Nortons Inc. acted for Caxton and CTP Publishers and Printers Limited, the Media Monitoring Project Benefit Trust and S.O.S. Support Public Broadcasting Coalition in this matter.