By Lehlohonolo Lehana.
The Competition Commission has recommended that the Competition Tribunal approve the proposed acquisition by Canal+ of MultiChoice subject to conditions.
This recommendation follows the commission’s investigation of the large merger notification received on 30 September 2024.
Canal+, which spun off from parent company Vivendi VIV.PA in December, made a firm offer last year of 125 rand in cash per MultiChoice share that it does not own, or about 35 billion rand.
Prior to the Competition Commission’s recommendation, many were concerned that the proposed merger of the companies would face too many regulatory hurdles to get approved.
This is mostly because Canal+ is a foreign company, and certain South African regulations limit foreign control over commercial broadcasting services.
Specifically, the Electronic Communications Act limits foreign control of commercial broadcasting services through strict ownership rules.
This legislation states that a foreigner may not, whether directly or indirectly, exercise control over a commercial broadcasting licensee.
The commission said in a statement that it has recommended to its sister regulator, the Competition Tribunal, that the multibillion-rand broadcasting mega-deal be permitted.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” it said.
“However, in recognition of the important role played by [MultiChoice] within the broader audiovisual ecosystem in South Africa, and to address public interest concerns raised by various stakeholders, the commission has recommended approval of the merger subject to a number of conditions.”
These conditions include addressing employment concerns, increasing the shareholding of historically disadvantaged persons (HDPs) and workers in Orbicom and LicenceCo, supplier development commitments, the merged entity’s continued operation from South Africa, plurality of television news and export promotion.
The merger parties have agreed to a moratorium on retrenchments for a period of three years following the merger implementation date.
They have also agreed that LicenceCO, a new entity that will house MultiChoice’s South African broadcasting assets, will be majority owned by HDPs and workers. They will also continue “certain corporate social responsibility initiatives such as skills development in the audiovisual industry and sports development”.
“In addition, Canal+ has undertaken that MultiChoice Group will remain incorporated and headquartered in South Africa, endeavour to promote exports, and will pursue a secondary inward listing on the securities exchange operated by the JSE.”
The total value of public interest commitments made by the merging parties and based on past spend by MultiChoice is projected at R26-billion over the next three years, the Competition Commission said.
The deal is now before the Competition Tribunal for final approval.
Canal+ CEO Maxime Saada said this approval is a major step forward in the company’s ambition to create a global media and entertainment company with Africa at its heart.
“We are committed to investing in local content and supporting South Africa’s creative and sports ecosystems, “he said.
“We strongly believe that this transaction is positive for South Africa, providing consumers with greater choice and Africa with a true entertainment champion.”
MultiChoice CEO Calvo Mawela added that the company is looking forward to closing the transaction, not only for the benefit of shareholders, but also for the viewing public and the multiple industries that depend on MultiChoice.
“We will continue to cooperate with all regulatory authorities towards a timely conclusion of this important process,” he said.