Setback for MultiChoice in decade-long SABC merger dispute

MultiChoice is once again on the back foot in a long-running legal dispute about whether a 2013 agreement with the SABC constituted a notifiable merger under SA law.

On Monday, the Competition Tribunal dismissed an exception application brought by MultiChoice in the matter. 

The case arises from a complaint lodged by Caxton and CTP Publishers and Printers, the SOS Support Public Broadcasting Coalition and the Media Monitoring Project Benefit Trust.

“The applicants allege that a commercial and master channel distribution agreement, concluded between MultiChoice and the SABC in 2013, constituted a notifiable merger under the Competition Act, and that the parties failed to notify the Competition Commission as required by the act,” the tribunal said in a statement. 

“In terms of the agreement, the SABC agreed to let MultiChoice carry its unencrypted free-to-air channels on MultiChoice’s subscription platforms, that is M-Net, in exchange for payment, with a clause allowing MultiChoice to terminate or suspend the agreement and claim a refund if the SABC encrypted its free-to-air channels.”

The five-year agreement worth R500m gave MultiChoice the right to broadcast SABC’s 24-hour news channel and an entertainment channel, SABC Encore.

In 2018, the Competition Commission ruled that the agreement constituted a notifiable merger.

In 2015 it emerged that as part of the deal the SABC undertook to back MultiChoice’s position on digital migration, which was that set-top boxes to convert the digital signal to analogue after migration would not be encrypted. Then SABC COO Hlaudi Motsoeneng received an R11m “bonus” for negotiating the contract. 

The ruling by the commission had taken MultiChoice and the SABC by surprise as it contradicted two previous rulings by the Competition Tribunal and the Competition Appeals Court that the agreement was not a merger.

In April 2021, the commission filed a supplementary affidavit, with the tribunal then reaffirming the commission’s finding of a notifiable merger.

In response, MultiChoice brought an exception application requesting the tribunal to declare that the facts presented by the commission and the applicants do not constitute a merger, and to dismiss the main application on that basis.

After a hearing, the tribunal dismissed MultiChoice’s exception application. 

“We are not satisfied that on all possible readings of the facts as set out in the commission’s affidavits, its report, and the affidavits of Caxton, Media Monitoring and SOS, that no cause of action has been made out that the conclusion of the agreement gave MultiChoice the power to influence the policy of SABC, which if established, would constitute a merger in terms section 12(2)(g) of the act,” said the tribunal. 

With Caiphus Kgosana 

gavazam@businesslive.co.za