Canal+–MultiChoice Merger Gets Conditional Nod from Competition Commission

In a major development for South Africa’s media and entertainment industry, the Competition Commission has formally recommended that the Competition Tribunal approve the proposed acquisition of MultiChoice Group Limited by Groupe Canal+ SAS, subject to a series of stringent public interest and structural conditions. This recommendation follows the Commission’s thorough review of the large merger notification filed on 30 September 2024.

The Commission, an independent statutory body operating under the Department of Trade, Industry and Competition (DTIC), is mandated by the Competition Act to ensure that mergers and acquisitions do not harm market competition or negatively affect the public interest. Alongside the Competition Tribunal and the Competition Appeal Court, the Commission plays a pivotal role in maintaining a fair and competitive market environment in South Africa.

The Parties Involved

The acquiring group, Groupe Canal+ SAS, is a French media and entertainment conglomerate engaged in a wide range of activities, including audiovisual content production and distribution, video game development, book publishing, and advertising. Canal+ is ultimately controlled by Vivendi SE, a global leader in content creation and media distribution.

MultiChoice, the target of the acquisition, is a South African-based company best known for its pay-TV service DStv and streaming platform Showmax. The merger structure includes the creation of a new company called LicenceCo, which will hold local broadcasting licenses and subscriber relationships in South Africa. LicenceCo will broadcast content via DStv under the merged entity.

Competition and Public Interest Assessment

Following its in-depth investigation, the Commission concluded that the transaction is unlikely to substantially lessen or prevent competition in the relevant media and broadcasting markets. However, given MultiChoice’s significant presence and influence within South Africa’s audiovisual ecosystem, the Commission emphasized the need to address a host of public interest issues raised by stakeholders during consultations.

“The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” a spokesperson said. “However, in recognition of the important role played by the Target Group within the broader audiovisual ecosystem in South Africa, and to address public interest concerns raised by various stakeholders, the Commission has recommended approval of the merger subject to a number of conditions.”

Key Conditions for Approval

The Commission has proposed a comprehensive set of conditions that the merged entity must comply with. These include:

• Employment Protections: A three-year moratorium on layoffs post-merger to safeguard existing jobs within the merged group.

• Ownership Transformation: The majority shareholding of LicenceCo will be held by historically disadvantaged persons (HDPs) and workers.

• Local Operations Commitment: MultiChoice will remain incorporated and headquartered in South Africa, and seek a secondary inward listing on the Johannesburg Stock Exchange (JSE).

• Diversity in Media: LicenceCo is required to continue procuring and broadcasting diverse local news content through DStv.

• Supplier Development and SMME Support: The merged entity must support local audiovisual content producers, including procurement from HDPs and SMMEs.

• Export Promotion: The new group must work to promote South African content in international markets.

• Corporate Social Responsibility: Commitments to continue programs in skills development and sports promotion.

Economic Impact

The Commission estimates that the total public interest commitments made by the merger parties amount to approximately R26 billion over the next three years, based on historical spending patterns by MultiChoice. This includes support for local content production, employment preservation, and development of new talent within the South African audiovisual sector.

Deputy Commissioner Hardin Ratshisusu stated, “In large mergers, the Commission is required to assess and to ultimately make a recommendation to the Tribunal. The Commission is satisfied that the conditions attached to this merger sufficiently address the concerns raised during the investigation. The matter is now before the Tribunal for a final determination.”

Next Steps

The Competition Tribunal will now review the Commission’s findings and determine whether to approve the merger as recommended. If approved, this deal could significantly reshape South Africa’s broadcasting landscape, potentially creating a powerhouse capable of competing more effectively on a global stage.

As stakeholders await the Tribunal’s final ruling, the conditions attached suggest a keen focus not only on economic considerations but also on inclusivity, employment, and the sustainability of the local media ecosystem.