Johannesburg | Tuesday
THE proposed merger between New Africa Investments Limited (Nail) and Kagiso Media Limited (Kagiso) has been approved unconditionally by the Competition Commission, it was announced on Monday.
Nail is listed on the JSE as a public company and has interests in number of markets including radio broadcasting, print media, and investments. Kagiso is also listed on the JSE and has interests in the broadcast and marketing industries.
The transaction is subject to independent approval from the Competition Commission and the Independent Communications Authority of SA (Icasa) –with the latter’s decision still pending.
The commission consulted with Icasa prior to making its decision.
Other players in the industry have made submissions to both Icasa and the commission on the proposed merger, highlighting areas of concern.
The commission nevertheless found the transaction would not substantially lessen competition in the market.
Both Nail and Kagiso operate radio stations that cover particular geographic areas and/or parts of different geographic areas. An overlap in the geographic market only occurs with Radio Jacaranda, in which Nail has 37,2% shareholding and Kagiso 42,5% respectively.
The merging parties’ market shares on a regional basis as far as listenership is concerned are below 15% and are unlikely to substantially lessen or restrict competition, the commission said.
If the market shares for the radio broadcasting industry are determined from a national perspective, the combined market shares of the merging parties are not significant and do not raise competition concerns, it added.
After the merger transaction the parties will have a 79,7% shareholding in Jacaranda and 63,3% shareholding in RadMark, a national adverting radio sales house in which Nail currently holds 31,7% and Kagiso 31,6%.
Shareholding of 79,7% in Jacaranda is high but the radio station is active predominantly in Gauteng and faces strong competition from SA Broadcasting Corporation (SABC) and Primedia radio stations such as Highveld Stereo and 5FM respectively.
Regarding RadMark, there will be no change in the current competitive situation as a result of the proposed merger.
The major competitor to all privately owned radio stations is the SABC, which has a large amount of successful, radio stations and has government’s backing.
Other competitors such as Primedia and newly formed P4 cause healthy competition in the broader radio market.
Both advertisers and listeners have key countervailing influences in the radio broadcasting industry and exercise important competitive pressure on radio broadcasters.
The commission’s findings are that, in all the product markets identified, there are no significant competition concerns that arise from the proposed merger.
Furthermore, the allegation that the proposed merger in respect of RadMark will strengthen Nail’s vertical integration into the market for media marketing is also not cause for concern as the merging parties already jointly own it.-Sapa