Big development in MultiChoice-SABC merger case

The Competition Tribunal has dismissed MultiChoice’s exception application regarding an alleged notifiable merger between the broadcaster and the South African Broadcasting Corporation (SABC).

“We are not satisfied that no cause of action has been made out that 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,” the Tribunal said.

“The central issue raises complex issues of both fact and law and potentially affects competition in the relevant markets and millions of South African consumers.”

This follows a complaint against MultiChoice and the SABC, alleging that the two completed a Commercial and Master Channel Distribution agreement in 2013 and failed to notify the Competition Commission.

The agreement allowed MutliChoice to carry the SABC’s unencrypted free-to-air channels on its DStv and GoTV subscription platforms in exchange for payment.

The agreement also included a clause allowing MultiChoice to terminate or suspend the deal and claim a refund if SABC encrypts its free-to-air channels.

This was at the height of MultiChoice’s battle with E-tv owner eMedia over whether government-subsidised digital terrestrial television (DTT) set-top boxes (STBs) should include encryption capabilities.

In essence, the fight was over whether MultiChoice’s rivals, chiefly eMedia, should be given a government-subsidised entry into pay TV.

MultiChoice argued that the additional encryption technology would needlessly increase the cost of the decoder-like STBs.

It also highlighted that the STBs were intended to be a temporary, intermediate measure for people whose older TVs could not receive digital TV signals.

eMedia countered that without encryption, there was a risk that government-subsidised STBs for indigent households would be scalped in overseas markets that use the same DTT standard as South Africa.

The fight was in court for years, and even though the government’s official position favoured encryption, the SABC signed an agreement that directly conflicted with policy at the time.

According to the Competition Commission, the agreement enabled MultiChoice to influence the strategic direction of the SABC, making it a notifiable merger.

Caxton and CTP Publishers and Printers, the S.O.S Support Public Broadcasting Coalition, and Media Monitoring Africa brought the initial complaint against the agreement in 2015.