Universal was a Special Purpose Vehicle (SPV) set up by Seyed Jamali, a businessman with diversified interests in property and media to acquire the interest in Mmegi, which is a holding company for various businesses in the printing, publishing and distribution sectors. Through another company, Seyed Jamali owns a controlling stake in Duma FM, a private radio station in Botswana. On the other hand Mmegi owns, through one of its subsidiaries, an 18% shareholding in Gabz FM, another private radio station in Botswana.
The Competition Authority is tasked with the mandate of investigating and assessing mergers for purposes of determining whether a merger is likely to have a negative impact on competition; or whether or not a merger is justifiable on grounds of public policy.
In this particular case, the proposed merger between Universal and Mmeg had already been implemented, but pursuant to provisions in the Competition Act [CAP 46:09] the Competition Authority has the power to retroactively make a determination on a merger. Upon notification of the merger approval by the two parties, the Competition Authority undertook assessment of the merger, examining documents submitted by the parties and convening a public hearing to allow interested third parties to make submissions in respect of the merger. At this hearing, the Botswana Media and Allied Workers Union (BOMAWU) and Gabz FM made submissions opposing the merger.
The Competition Authority, in determining the merger, rejected the acquisition by Universal of a stake in Mmegi. The Competition Authority found that the merger, if approved, was likely to result in the prevention or substantial lessening of competition in the country. Specifically, the merger would have lessened competition in the commercial radio sector, given that it would have resulted in Gabz FM and Duma FM being controlled or indirectly controlled by the same entity.
Following these findings, the Competition Authority directed Universal to divest its acquired shareholding in Mmegi to an entity with no relation to Universal within three months of 17 February 2017 and to follow the necessary notification procedures if the divestiture triggers the thresholds for merger control as outlined in the Competition Act [CAP 46:09]. This three-month period was subsequently extended by a further two months.
As at the date of this publication, there is no public information available confirming whether the divestiture has been completed.
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