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15 May 2012 07:24
A man browses the morning newspapers. (Oupa Nkosi, M&G)
The decision on Monday followed a hearing into the merger which began on March 15 and concluded on April 30.
The competition commission and Caxton publishers and printers had provided submissions on potential competition and public interest concerns with the merger.
According to the commission, since Media24 and Natal Witness already jointly own Africa Web, a company which prints community newspapers in KwaZulu-Natal and the Eastern Cape, the merger would result in Media24 increasing its share in Africa Web.
This was of concern as Media24 could use its increased control of Africa Web to exclude the company’s existing customers – community newspapers – from the market in a effort to strengthen its own publications.
It suggested that there should be a partial divestiture of Africa Web.
Caxton, which opposed the merger, argued for a full divestiture.
Divestiture is the disposition or sale of an asset by a company. A company will often divest an asset which is not performing well, which is not vital to the company’s core business, or which is worth more to a potential buyer as a separate entity than as part of the company.
The tribunal allowed the merger, but imposed several conditions.
It stipulated that the Media24 group not influence the operations and strategies of Africa Web and that it, together with Paarl Media, notify the commission of future mergers with small, independent publishers.
The conditions would be in effect for five years from the date of the tribunal’s order, or for the duration of Media24 and Paarl Media’s control of Africa Web.
Africa Web would also have to submit an annual report to the commission on each anniversary of the tribunal’s order illustrating its compliance with the conditions.
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