On 7 August 2013, the South African Competition Commission cleared the second stage of the sale of Independent News & Media South Africa (Pty) Ltd (INMSA), a South African publishing company, subject to conditions relating to the cross-ownership of other media companies.
The transaction occurred in two parts, with three companies ultimately acquiring shares in INMSA. The state-owned Public Investment Corporation (PIC) will now hold 25% of the shares, Sekunjalo Independent Media (Pty) Ltd 55% and Newco (itself a joint investment between China International Television Corporation (CITVC) and China Africa Development Fund) will acquire the remainder.
The Commission found no horizontal or vertical overlap between the activities of Sekunjalo, CITVC and INMSA. However, the Commission was concerned by PIC’s substantial interests in two of INMSA’s competitors within the print media industry – Times Media Group (TMG) and Naspers Limited. TMG, Naspers and INMSA make up three of the four largest media companies in South Africa.
The Commission accepted that PIC does not exercise control over TMG or Naspers (its shareholdings are 19.2% and 17.22%, respectively) and is not represented on the board of either company.
While the Commission cleared both stages of the acquisition (see here and here), it did so on a number of conditions intended to ensure PIC will not be in control of INMSA in any form post-acquisition. The conditions are also intended to prevent the competitors from exchanging information via PIC’s potential presence on each company’s board of directors, and to prevent anti-competitive coordination. The conditions include:
- PIC will not appoint any common directors between INMSA and Naspers, or between INMSA and TMG;
- PIC must ensure its investments in INSMA, Naspers and TMG are managed separately and housed in different departments within PIC; and
- the parties will file a new merger notification if PIC acquires a form of control over INMSA in the future.
In Australia, the ACCC is similarly wary of minority acquisitions that could have the effect of lessening competition, even if the acquirer does not obtain actual control. The ACCC’s merger guidelines
provide that an acquisition may be blocked if it alters the incentives of the parties, for example by providing a competitor with access to commercially sensitive information or by facilitating coordinated effects.