One might be forgiven to assume that the concept of “control” for merger review purposes under the Competition Act 89 of 1998 (“Competition Act”) would be well- settled by now. This issue resurfaced in a recent decision of Capital Newspapers Proprietary Limited and Another v Media 24 Holdings Limited and Others, where the Competition Appeals Court (“CAC”) had to demarcate the boundaries of what constitutes control, particularly in the context of strategic business decisions like digital transformation.
The case centred on a dispute following the Competition Commission’s (“Commission”) approval of a merger involving Media 24, Novus, Free 4 All, Intrepid, and Victory Ticket. The contentious issue was whether Media24’s decision to migrate certain titles (including Beeld, Rapport, and City Press) from print to digital form was part of the notifiable merger itself.
What Constitutes a Merger?
For context, section 12(1)(a) of Competition Act defines a merger as occurring when one or more firms directly or indirectly acquire or establish control over the whole or part of the business of another firm. The pivotal question, therefore, was whether the digital migration constituted an “incident of control” falling within this definition.
The Conflicting Positions
The merging parties argued that the migration was a separate, unilateral commercial decision. They contended that Media24 first decided to migrate the titles as part of its broader digital strategy, and only thereafter took the decision to sell the relevant assets. Their position was that the migration was not sufficiently connected to the merger and would have occurred irrespective of it.
The applicants challenging the merger approval took a contrary view. They argued before the CAC that the migration was an integral part of an overall strategic plan that should have been notified to and investigated by the Commission as part of the merger.
The CAC’s Reasoning and Decision
Following an extensive chest puffing spectacle by the parties, the critical question the CAC had to grapple with was this, would the migration have taken place but for the merger?
In its judgment, the CAC concluded that the migration decision was a manifestation of Media24’s overarching digital strategy, a unilateral commercial decision taken without any incident of loss or acquisition of control by another firm. It was a strategic move taken independently, not one caused by the impending merger. Consequently, the CAC found that the migration did not form part of the merger as defined in section 12 of the Act and was thus not subject to the competition authorities’ merger jurisdiction.
Conclusion
This ruling serves as an important precedent. It draws a clear distinction between a merger transaction, which involves a transfer of control, and unilateral strategic decisions a company may take independently. The CAC’s decision affirms that the fundamental test for merger notification remains the acquisition of control, not the commercial consequences of a firm’s independent strategic choices, even when those choices are significant, such as the pivot from print to digital.
Masedi Tlhong is a director at TGR Attorneys. He holds an LLB, Postgraduate Certificate in Competition Law and a Postgraduate Diploma in Management from the University of the Witwatersrand. His interest lies in competition law, mergers and acquisitions, corporate strategy and regulatory law. He is passionate about helping companies navigate complex transactions and unlocking value in high-growth sectors.
Get in touch with Masedi at: Telephone Number: 011 243 5084 Email: M.Tlhong@tgrattorneys.co.za
