South Africa’s Competition Tribunal on Monday dismissed the Kagiso Consortium’s application for an urgent interdict to restrain the Tiso Consortium from implementing a series of transactions to purchase shares in New Africa Investments Limited (Nail).
Kagiso contended that it amounts to a unlawful merger.
The Kagiso Consortium — comprising Kagiso Media, Johnnic Communications, Caxton and CTP Publishers and Printers Limited — and the Tiso Consortium — comprising Tiso Capital, Investec, Mineworkers Investment Company, Safika and Capricorn — are rival bidders for the acquisition of controlling shares in Nail.
This is not the end of the case, however. The tribunal has given Kagiso a further opportunity to argue that the transaction between Tiso and Nail should be declared a notifiable merger, but only after it has received further filings from all the parties and the Competition Commission.
The tribunal said in a statement on Monday that the interdict has been denied for the interim on the grounds that it would not be effective.
The tribunal said: “At this stage it appears that Tiso has effectively bought up to 81.9% of the ‘N’ shares in Nail and 31,8% of the ordinary shares. If this purchase of shares was harmful, it is too late to be remedied.”
The tribunal was unwilling to consider whether the transaction constituted a merger, as Tiso had argued that it had been given only 24 hours’ notice to respond to the application and might wish to make further submissions on this issue.
Kagiso applied for an urgent interdict on the basis that the transactions constituted a scheme by Tiso to implement a merger with Nail.
Kagiso claimed that the scheme is unlawful because mergers may not be implemented until they have been approved by the relevant competition authority. Tiso denied that its scheme constitutes a merger and alleged that it was under no obligation to notify.
Although the tribunal has not granted the urgent interdict, it is still possible that an interdict may be granted when the matter is set down again for hearing on October 29 2003.
In the interim the tribunal has ordered the Competition Commission to give its view on whether the transaction is notifiable. After the commission has filed its response all the other parties will be allowed to supplement their existing filings.
Thereafter, the case will be argued again on the basis of the supplemented filings on October 29. As the relief sought is urgent the tribunal has truncated the normal time periods for filing affidavits.
The tribunal pointed out: “If the transactions are notifiable as Kagiso and, it appears, provisionally at least, the commission contend, the consequences for failing to notify may involve both administrative penalties and divestiture.
“The boards of the firms concerned should reflect carefully on their position in relation to notification in the interim period until the matter is finally resolved.”
Costs have been reserved pending the final hearing on October 29. — I-Net Bridge