The Competition Commission is allowed to investigate whether a channel licencing agreement between the SABC and MultiChoice, dating from 2013, was in fact a notifiable merger.
The Constitutional Court on Friday set aside a 2017 Competition Appeal Court ruling and said the Competition Commission is entitled to perform such an investigation, the SABC said in a statement.
"MultiChoice agreed in terms of the agreement to pay the SABC fees of more than R500m over a period of five years, in exchange for which the SABC undertook that the entertainment channel, to be broadcast on the MultiChoice platform, would consist mainly of content from the SABC’s substantial archive of programmes (SABC archive)," the ruling said.
It added that the agreement had been the subject of a hearing at the Tribunal and three separate hearings in the Competition Appeal Court. At issue was whether the agreement amounted to a notifiable merger as defined in the Competition Act.
Caxton, the Save Our SABC Coalition and Media Monitoring Africa had applied for leave to appeal in the Constitutional Court after the Competition Appeal court ruled that Commission held that its June 2016 order “did not and cannot be read to give the [Commission] powers in terms of section 49A of the [Competition] Act”.
There were two main concerns raised by Caxton regarding the SABC/Multichoice agreement. Firstly, it was concerned that it gave MultiChoice an exclusive license to use certain SABC content to broadcast on an entertainment channel on the DStv Bouquet called Encore.
Secondly, Caxton was concerned that the SABC agreed to broadcast its SABC 1, 2 and 3 channels, and any future channels, on an unencrypted basis and without any conditional access system.
In the ruling, Judge Fayeeza Kathree-Setiloane wrote that although the agreement between MultiChoice and the SABC ended in July 2018, it does not diminish the necessity for the Commission to investigate whether the agreement constitutes a notifiable merger.
"We were informed that the agreement may be renewed or a similar one may be concluded between the SABC and MultiChoice, having regard especially to the ongoing debates on encryption regarding South Africa’s migration to DTT (digital terrestrial television).
"It is essential, for this reason, that clarity be obtained from the competition authorities on whether the agreement constitutes a notifiable merger as defined in the Competition Act. Accordingly, the interests of justice require that leave to appeal be granted."
The Competition Commission was directed to file its report to the Competition Tribunal within 30 days of Friday's order being given.
"The first (SABC) and second (Multichoice) respondents are ordered jointly and severally to pay the costs of the application, including the costs of two counsel", the judgment read.
The SABC said on Friday that it noted the judgment.
"The SABC commits to cooperate with the Competition Commission in its investigation," the statement read.
If the investigation uncovers that it was a notifiable merger, the SABC and MultiChoice will be in contravention of the Competition Act for failing to obtain approval for the merger, from the Commission, the Tribunal or the Competition Appeal Court, before implementing it.
MultiChoice told Fin24 that it welcomes the clarification provided in the Constitutional Court’s judgment regarding the Competition Commission’s powers in its review of the 2013 channel agreement between MultiChoice and SABC.
MultiChoice said it will continue to cooperate fully with the Commission and remains confident that the agreement does not constitute a merger.
"As we’ve stated on many occasions, the agreement was a standard supply contract similar to the ones we have with other channel suppliers locally and internationally," said MultiChoice.