– by Michael-James Currie
On 17 February 2017, the Competition Authority of Botswana (CA) prohibited a merger between Universal House (Pty) Ltd and Mmegi Investment Holdings (Pty) Ltd.
Furthermore, the merger had already been implemented and, therefore, the CA ordered that the 28.73% interest in Mmegi Investments which Universal Investments had acquired be divested to a third party.
At the stage of ordering the divestiture, a suitable third party had not yet been identified and the merging parties were obliged to sell the 28.73 shares to a third party “with no business interests affiliated in any way with the acquiring entity”. The divestiture is also to take place within three months of the CA’s decisions and, should the thresholds be met for a mandatorily notifiable merger, the CA would require that the proposed divestiture also be notified.
The CA prohibited the merger on the grounds that the transaction was likely to lead to a substantial prevention or lessening of competition in the market. In particular, the CA held that the “market structure in the provision of commercial radio broadcasting services will be altered, and as such raises competition and public interest concerns”.
The CA does not, in its decision, elaborate specifically on what basis the proposed merger would likely lead to a lessening of competition in the market nor is there any mention of the public interest grounds upon which the CA prohibited the merger.
Regardless, the CA’s decision is clear affirmation that, like many competition agencies in Africa, it will not be seen to merely rubber-stamp mergers, but rather embark on substantive investigations in order to assess the impact of a particular transaction on the market, both in terms of traditional competition considerations and also on public interest grounds.
Accordingly, in light of the CA’s increasingly vigorous approach to merger control, firms who are potentially looking at potential mergers or acquisitions in Botswana need to take cognizance of the importance:
- of ensuring that transactions are notified to the CA prior to implementing such a transaction; and
- of ensuring that a comprehensive market and competitiveness report is submitted as part of the merger filing to ensure that the merging parties are best placed to demonstrate that a proposed transaction would not have adverse effects on competition in the market or on the public interest grounds.
In addition to engaging in increasingly substantive merger assessments, the CA has also demonstrated that it has the confidence and resources to tackle anti-competitive conduct practices as well as conduct market studies.
The Competition Authority of Botswana is, therefore, fast becoming one of Southern Africa’s more robust competition agencies.