- Influential entrepreneur often accused of corruption runs virtual media monopoly
Sello Motseta
22nd September 2021
Almost 5 years after the Competition Authority issued its February 2017 instruction that Seyed A. Jamali, through his company Universal House(Pty) Ltd should divest his 28.73% shareholding in diversified media group Mmegi Investment Holdings(MIH) Pty Ltd, Jamali has stubbornly refused to do so.
The shares sold without the approval of the Competition Authority, in violation of section 52(1) of the Competition Act, which provides that ‘where a merger is proposed, each of the enterprises involved shall notify the Authority of the proposed merger, in the prescribed manner,’ was rejected on the grounds it would substantially lessen competition in the local media landscape.
Majority shareholders Methaetsile Leepile 41.65% and Titus Mbuya 40.30% had disposed of a portion of their shareholding because the business had a strong need for liquidity and Jamali saw the proposed transaction as an economically viable business opportunity to leverage on.
Almost seven months after submissions were made by lawyers from litigating parties no judgement has been made. It typically takes a maximum of about 3 months for a judgement to be made.
“Submission in the case was made in late March and my understanding is that we await judgement,” said Methaetsile Leepile, shareholder in Mmegi investment Holdings(MIH) and one of the principal litigants in the matter.
He said, “I believe the Competition and Consumer Authority(CCA) is not contesting our legal suit. We believe that the Competition Authority should have taken decisive action to compel Universal to divest of Mmegi investment Holdings(MIH).”
The Competition Authority expressed view that Jamali’s acquisition of Mmegi Investment Holdings(MIH) would enable him to control Duma FM which he owned and a direct competitor Gabz FM. It would have a negative effect on media pluralism by limiting diversity of opinions via hidden monopolies.
The merged entity would be able to lower advertising rates in the short term to kill competitors and would cripple opportunities for media professionals by limiting job opportunities and possibilities for better wages with direct competitors seeking to poach talented staff.
The Competition Authority provided an implementation plan to Universal House requiring a divesture plan from Mmegi Investment Holdings(MIH) within 14 days and instructing them to provide an update to the Competition and Consumer Authority(CCA) on disposal of their shareholdings in merged entity within 2 months of its decision. Jamali has to date failed to comply with this ruling.
The Competition and Consumer Authority has however rejected criticism that it is a toothless ‘bulldog and lacks the political will to enforce its decision.’
Gideon Nkala Director Communications and. Stakeholder Relations, at the Competition and Consumer Authority(CCA), said “The Competition Authority made an investigation on the matter, which was an engaging process and ultimately made a determination.”
He said, “Before we could pronounce our determination on the Mmegi shares and enforce our decision, one of the parties approached the High Court to have the High Court order the CCA to enforce our decision. Since this is what we were going to do anyway, we did not oppose this application.”
Nakala claimed that without the current application the Competition Authority(CCA) would have handed down its decision and enforced it. “What must be appreciated is that the Authority cannot just act without investigating and informing itself,” said Nkala.
Nkala maintained that as part of the investigation process the Competition Authority had to conduct its own valuation of the shares. The valuation exercise was only recently concluded.
“Without a proper investigation and enquiry into the reasons for non-compliance, it would have been premature for the CCA to have approached the Honourable Court to bring about compliance,” said Nkala.
Mmegi Investment Holdings(MIH) is the owner of Mmegi Newspaper/Monitor, Botswana Guardian, Midweek Sun, Mmegi publishing House publisher of various textbooks for the school market, BONESA Distribution Company and Mmegi Broadcasting Corporation owner of Gabz FM.
The Mmegi Investment Holdings(MIH) shareholders include Methaetsile Leepile 28.73%, Titus Mbuya 25.30%, Botswana Mineworkers Union 8.57%, Mmegi Publishing Trust 7.70%, Lebang Mpotokwane 2.70%, Modise Mapanyane 0.18%, Changu Mannathoko 0.08%, Burton Mguni 0.03%, Pako Kedisitse 0.03%, Bojosi Otlhogile 0.02%, Vincent Seretse 0.01% and Monageng Mogalakwe 0.002%.
