The Competition Tribunal has set aside the Competition Commission’s 25 January 2011 decision to unconditionally approve the small merger between Paarl Media Limited and a division of Primedia (Pty) Ltd, Primedia@Home. In the Tribunal’s decision, which it issued earlier today, the Tribunal found that when approving the merger the Commission did not properly apply its mind to the facts before it. The Tribunal has therefore sent the case back to the Commission for its reassessment on condition that it is dealt with by a new case team.

The decision follows an application to the Tribunal, by Caxton and CTP Publishers and Printers Limited, to review the Commission’s decision to approve the merger. Caxton alleged that the process followed by the Commission in its assessment of the merger was tainted with errors and irregularities. Furthermore that notwithstanding objections to the merger from various firms, including Caxton, the Commission dismissed the concerns raised without any reason or justification, but decided instead to approve the merger unconditionally.

In terms of the merger transaction Paarl Media sought to acquire the business of Primedia@Home. Paarl Media is an indirect subsidiary of Media 24 Ltd, which is ultimately controlled by Naspers Ltd. Media 24 in turn controls On-the-Dot which distributes among other things, leaflet advertising by way of knock and drop distribution. Paarl Media is a commercial printing operation which prints a wide variety of printed material including magazines, newspapers and leaflets, and also produces and distributes a branded advertising jacket called Shoppers Friend.

The Tribunal clarified the ambit of its decision by stating that in an appeal it “would be concerned with whether a decision of the Commission was right or wrong” but that in a review, such as this case, it was “concerned with the manner in which the Commission has arrived at its decision.” Having considered the evidence presented to it during the review application on 31 May 2011, the Tribunal concluded that the Commission’s decision to approve the media distribution merger was flawed because, amongst other things, it overlooked or did not deal with critical evidence in its assessment of the potential competitive effects of the merger. The Tribunal, however, dismissed Caxton’s application for an interdict on the continued implementation of the merger.

The full decision is available on the Tribunal’s website: www.comptrib.co.za.