In South Africa, the Competition Commission has determined that a merger arising from a 2013 agreement between MultiChoice and the SABC qualifies as notifiable and breaches the Competition Act.
In response, MultiChoice has submitted an exception application to the Competition Tribunal to contest this finding.
The agreement in question was a channel carriage deal for DStv, which included a termination clause that would come into effect if the SABC opted to broadcast its channels on an encrypted digital terrestrial television (DTT) platform. This occurred during a contentious period when MultiChoice was in a dispute with eMedia, the owner of E-tv, regarding whether government-subsidised DTT set-top boxes (STBs) should feature encryption.
The core of the debate revolved around whether competitors, notably eMedia, should gain access to the pay-TV market backed by government subsidies. MultiChoice contended that adding encryption technology would unnecessarily inflate the costs of these decoder-like STBs and pointed out that they were intended as a temporary solution for those with older TVs unable to receive digital signals.
In contrast, eMedia argued that without encryption, there was a threat that the subsidised STBs, provided for economically disadvantaged households, could be resold in foreign markets that use the same DTT standards as South Africa.
This legal battle waged on for years. Despite the government’s official support for encryption, the SABC entered into an agreement that directly contradicted that stance. The Commission concluded that this deal granted MultiChoice significant sway over the SABC’s strategic direction, effectively categorising it as a notifiable merger.
The complaint against the agreement was initially filed in 2015 by Caxton and CTP Publishers and Printers, the S.O.S Support Public Broadcasting Coalition, and Media Monitoring Africa.
After rigorous proceedings spanning the Competition Tribunal, Competition Appeal Court, and even the Constitutional Court, the Commission confirmed that the channel distribution agreement constituted a notifiable merger.
The agreement’s details surfaced in September 2013, when the Sunday Times revealed that MultiChoice had secretly negotiated a contract with the SABC. According to the agreement, should the SABC start broadcasting its channels on an encrypted DTT platform, it risked the cancellation of a lucrative five-year contract worth millions.
This deal also attracted attention from the Judicial Commission of Inquiry into State Capture. However, in 2022, Chief Justice Raymond Zondo declared MultiChoice free from any allegations of wrongdoing. “In conclusion, there is no evidence that MultiChoice had been involved in any improper, unlawful conduct, still less conduct which amounted to fraud or corruption,” the Zondo Commission’s report affirmed.
