The Competition Authority(CA) Thursday denied receiving a complaint by The Tswana Times on the Government advertising ban compelling Government Ministries and parastatal organizations to place adverts with Daily News to the detriment of the private media despite the job losses it was causing, in an industry currently dominated by indigenous enterpreneurs.
The authority also appeared tongue tongued when asked to respond to allegations that influential Asian businessman Seyed Jamali, who has strong connections to the ruling party, had refused to dispose his shares in Mmegi Holdings despite a Competition Authority ruling that rejected the acquisition of 28.73% shares in Mmegi Investment Holdings (Pty) Ltd by Universal House (Pty) Ltd.
Jamali had been ordered by the Authority to within 14 business days from the decision date, which was the 17th February 2017 to report to the Authority on how the disposal will be done and within two months from the decision date, provide the Authority with a status update on their progress towards compliance with the decision of the Authority.
Despite Universal House(Pty)Ltd not having done as prescribed the Authority appears reluctant to act on Jamali. It cultivates perception that Competition Authority is a ‘toothless bulldog.’
“We have option of legal redress,” said Magdeline Gabaraane Director Mergers and Monopolies at the Competition Authority.
The merger assessment provisions are contained under Part X of the Competition Act (Cap 46:09). The Authority’s mandate with regards to the assessment of mergers and acquisitions does not end at the stage of issuing a decision but extends to the post-decision stage through conducting compliance monitoring and post-merger impact assessments.
The post-merger assessments provide an opportunity to check whether the conditions/remedies imposed were sound, given the information available at the time; and if the assumptions on which the conditions were made were sensible. The following seven (7) transactions are a summary of the cases that were assessed during the 2015/16 and 2016/17 Post-merger Impact Assessments.
Instead the Competition Authority(CA) elected to blow its own horn saying that it had achieved a couple of milestones like its intervention in the acquisition of Trojan and Shield by G4S. The merger was expected to result in reduced competition due to the removal of a small but significant competitor and enhanced market power for the acquiring enterprise.
“Following the rejection of the acquisition, the Authority became aware of a transaction between the parties which would have the effect of circumventing the decision of the Authority. The parties claimed that Shield was in dire financial strain and as such would shut down its business; and dispose its assets, allowing G4S to acquire those assets in the open market. In realising the potential effect of the transaction, the Authority intervened and prohibited G4S from acquiring the said assets,” said Gabaraane.
She said, “Through the Authority’s intervention, the management of Shield resolved that its assets, trading licence, trading name and clients list be transferred to a 100% citizen owned entity, Sancos MD Investment Enterprises (Pty) Ltd, owned by a minority shareholder in Shield. The Authority further directed that the assets and employees should not be affected and should thus continue to be utilised as before, under Shield.
Moreover, the Authority directed that G4S would be restrained for a period of twenty four months (as of June 2012), from soliciting any current clients of Shield. The restraint would only lapse and be of no further force and effect under the following conditions:
(i) Sancos t/a Shield closes down business or sells its business, subject to the closing down not being due to the fact that G4S directly or indirectly solicited clients as provided in the submitted client list during the twenty four month restraint period; and/or
(ii) There is a change in management control and/or majority shareholder control in Sancos at any time whatsoever.
As a result of its decision Shield had grown as shown by the number of employees and contracts that the company has managed to secure (for example, there was a 45.6% increase in number of contracts secured by Shield in the period 2012 to 2015. With regards to employment, an increase of 64.1% was recorded for the same period); and
o In a related industry transaction, in December 2014, the Authority approved for Security Services Botswana (Pty) Ltd (“Security Services”), to acquire Hotline Security’s client service contracts with the required associated equipment. The acquisition availed a citizen owned enterprise an opportunity to compete in the cash-in-transit and alarm & response markets, which were previously dominated by a foreign owned enterprise, G4S.
In June 2012, the Authority revealed it also unconditionally approved the acquisition of 100% issued share capital in Shell Botswana by Vivo Energy Holdings B.V. (“Vivo Energy”).
However, considering the increasing levels of unemployment in Botswana, the Authority resolved to authorise the proposed transaction to take effect subject
to the commitments made by the parties as follows:
o the level of employment within Shell Botswana would not be negatively affected as a result of the transaction; and
o Vivo Energy should present more opportunity for enterprises trading in the downstream market as fuel retailers through increased capital injection and by providing more start-up capital to aspiring entrepreneurs.
Vivo Energy inherited a staff complement of fifty three (53) employees at the implementation of this transaction. As at February 2016, Vivo Energy had seventy eight (78) permanent staff which represented a 47% growth in their employment levels for permanent staff, post-merger. This was a positive contribution towards the attainment of section 59(2)(e) on employment promotion;
It also inherited forty three (43) retail sites when they acquired Shell Botswana; with eleven (11) new retail sites being opened, post-acquisition. This indicated a 25.6% increase in the number of new retail sites post-merger. All the eleven new sites are operated by Batswana in the following areas:
- Hillview Filling Station in Mogoditshane;
- A1 Service Station Northgate Mall in Gaborone;
iii. Gabane Filling Station in Gabane village;
- Otse Filling Station in Otse village;
- Bangwaketse Filling Station in Kanye village;
- Sowa Town Filling Station in Sowa Town;
vii. Palapye Filling Station in Palapye village;
viii. Safari Filling Station in Maun village;
- Masters Valley in Maun;
- Matante Mews Filling Station in CBD in Gaborone; and
- Ledumadumane Filling Station in Mogoditshane.
“The parties introduced programmes such as the Young Retailers Programme, which was intended to assist young locals with access to land and start-up capital for business. These two aspects (land and capital) are critical for the successful running of the business as in most cases; they are not easily accessible to youth. One such beneficiary of the Young Retailers Programme manages and operates the Bangwaketse Shell Filling Station in Kanye,” said Gabaraane.
